Political Activism and Firm Innovation

Journal of financial and quantitative analysis, Forthcoming

55 Pages Posted: 14 Dec 2015 Last revised: 21 Feb 2019

See all articles by Alexei V. Ovtchinnikov

Alexei V. Ovtchinnikov

HEC Paris - Finance Department

Syed Walid Reza

SUNY at Binghamton

Yanhui Wu

Queensland University of Technology - School of Economics and Finance; Financial Research Network (FIRN)

Multiple version iconThere are 2 versions of this paper

Date Written: February 18, 2019

Abstract

We hypothesize that political activism is valuable because it helps reduce political uncertainty, which, in turn, fosters firm innovation. We find that firms that support more politicians, winning politicians, politicians on Congressional committees with jurisdictional authority over the firms' industries, and politicians who join those committees innovate more. We employ a natural experiment to show a causal effect of political activism on innovation. We also show evidence of intra-industry and geographical political activism spillovers.

Keywords: political contributions, innovation, investment policy, political uncertainty

JEL Classification: D72, D80, G31, G38, O31, O38

Suggested Citation

Ovtchinnikov, Alexei V. and Reza, Syed Walid and Wu, Yanhui, Political Activism and Firm Innovation (February 18, 2019). Journal of financial and quantitative analysis, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2703365 or http://dx.doi.org/10.2139/ssrn.2703365

Alexei V. Ovtchinnikov

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

Syed Walid Reza (Contact Author)

SUNY at Binghamton ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States

Yanhui Wu

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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