Inside the Beltway Advantage Do US Senators Exploit Information Privilege in Congress

I examine whether U.S. senators leverage their access to privileged information for personal financial gain. I use a vector space document modeling approach to categorize legislations into industries and link it to senators’ stock transactions. I find that their stock-picking ability is influenced by factors such as their proximity and involvement with congressional bills. I also find that senators with greater privileges tend to achieve more significant returns through transactions ahead of relevant industry bills, particularly in the later stages of bill development. My study lends support to the “senatorial privilege” hypothesis.