The Policy Premium: Do Swedish Ministers Trade on What They Know?

Sammanfattning

This thesis examines whether Swedish Cabinet Ministers achieve abnormal returns on theirpersonal stock transactions and whether portfolio composition differs across politicalaffiliations and departmental oversight. Using disclosure data from 2017–2026, the studycombines descriptive portfolio analysis with transaction-level evaluations employing BHAR,CAPM, and Carhart Four-Factor models. The results reveal a strong ideological divergence:left-bloc ministers systematically mitigate risk through mutual funds, whereas center-rightministers exhibit significant direct equity participation, particularly in highly regulatedsectors such as Health Care, Financials, and Industrials. A striking performance paradoxemerges from the data. While aggregated ministerial portfolios do not systematicallyoutperform the broader market, isolated active transactions exhibit significant, long-termabnormal returns. On average, ministerial purchases generate an alpha of 26.2% over anine-month horizon, while sales effectively avoid 13.7% in underperformance over aone-year period. However, the data dismantles the narrative of systemic political enrichment.Ministers size individual equities as peripheral bets, meaning that the absolute wealth impactof these trades remains marginal. Furthermore, ministers are not immune to downside riskand exhibit behavioral pitfalls typical of retail investors, including severe underperformanceby those with formal financial sophistication. Ultimately, because abnormal returns and highCAGRs are isolated to active trading rather than passive holdings, the findings provide anempirical basis for reforming Sweden's reactive disclosure framework by adopting elementsof the "Norwegian model," such as freezing assets, enforcing divestment protocols, ormandating blind trusts