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Stock Ownership and Political Behavior: Evidence from Demutualizations

SAFE Working Paper No. 2

50 Pages Posted: 1 Feb 2013 Last revised: 12 Dec 2013

Markku Kaustia

Aalto University School of Business

Samuli Knüpfer

BI Norwegian Business School; Centre for Economic Policy Research (CEPR); Research Institute of Industrial Economics (IFN)

Sami Torstila

Aalto University

Date Written: December 12, 2013

Abstract

A setting in which customer-owned mutual companies converted to publicly listed firms created a plausibly exogenous shock to salience of stock ownership. We use this shock to identify the effect of stock ownership on political behavior. Using IV regressions, difference-in-differences analyses, and matching methods, we find the shock changed the way people vote in the affected areas, with the demutualizations being followed by a 1.7–2.7 percentage points increase in right-of-center vote share. Analyses of demutualizations that did not involve public listing of shares suggest that explanations based on wealth, liquidity, and tax-related incentives do not drive the results.

Keywords: Stock ownership, political behavior, salience, attention, identity

JEL Classification: D72, G11, P16

Suggested Citation

Kaustia, Markku and Knüpfer, Samuli and Torstila, Sami, Stock Ownership and Political Behavior: Evidence from Demutualizations (December 12, 2013). SAFE Working Paper No. 2. Available at SSRN: https://ssrn.com/abstract=2209645 or http://dx.doi.org/10.2139/ssrn.2209645

Markku Kaustia (Contact Author)

Aalto University School of Business ( email )

P.O. Box 1210
Helsinki, 00100
Finland
+3589 4313 8475 (Phone)
+3589 4313 8678 (Fax)

Samuli Knüpfer

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

HOME PAGE: http://www.samuliknupfer.com

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Research Institute of Industrial Economics (IFN)

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Sami Torstila

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland
+358 40 353 8069 (Phone)

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