The Partisan Policy Cycle and Firm Valuation
38 Pages Posted: 15 Mar 2011 Last revised: 20 Mar 2015
Date Written: March 19, 2015
Our research probes the firm valuation impact of partisan-motivated policy cycles. We first identify the micro-channels of policy transmission that link partisan policy disturbances to firm value. Then, we draw on firm-level data from 21 industrial democracies for the period extending from 1989 to 2008 to examine whether government partisanship has any distinct impact on firm value. We identify a surprisingly large and consistent positive relationship of left-oriented governments with firm value. Additionally, our research finds that the partisan impact on firm value is appreciably conditioned by factors like economic openness.
Keywords: International Corporate Finance, Firm Value, Political Economy, Classical Partisan Theory, Political Business Cycle, Firm Value, Fiscal Policy, Monetary Policy
JEL Classification: G30, P16
Suggested Citation: Suggested Citation