Political Attitudes, Partisanship, and Merger Activity

52 Pages Posted: 16 Dec 2019 Last revised: 18 Nov 2021

See all articles by Ran Duchin

Ran Duchin

Boston College - Carroll School of Management

Abed El Karim Farroukh

University of Washington

Jarrad Harford

University of Washington; European Corporate Governance Institute (ECGI)

Tarun Patel

Southern Methodist University - Cox School of Business

Date Written: November 17, 2021

Abstract

We demonstrate that similarity in employees’ political attitudes plays an important role in mergers and acquisitions. Using detailed data on employees’ campaign contributions to Democrats and Republicans, we find that firms are considerably more likely to announce and complete a merger when their political attitudes are closer. Furthermore, acquisition announcement returns and post-merger performance are higher when employees have more similar political attitudes. The effects are stronger when political polarization is greater, and when the target and acquirer plan to integrate operations. Overall, we provide new estimates that political attitudes and polarization affect the allocation of real assets.

Keywords: campaign contributions, mergers and acquisitions, politics, polarization

JEL Classification: G34, D72

Suggested Citation

Duchin, Ran and Farroukh, Abed El Karim and Harford, Jarrad and Patel, Tarun, Political Attitudes, Partisanship, and Merger Activity (November 17, 2021). Available at SSRN: https://ssrn.com/abstract=3497907 or http://dx.doi.org/10.2139/ssrn.3497907

Ran Duchin (Contact Author)

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Abed El Karim Farroukh

University of Washington ( email )

Box 353200
Seattle, WA 98195-3200
United States
2066319983 (Phone)

Jarrad Harford

University of Washington ( email )

Box 353226
Seattle, WA 98195-3226
United States
206-543-4796 (Phone)
206-543-7472 (Fax)

HOME PAGE: http://faculty.washington.edu/jarrad/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tarun Patel

Southern Methodist University - Cox School of Business ( email )

P.O. Box 750333
Dallas, TX 75275-0333
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
418
Abstract Views
2,674
rank
96,478
PlumX Metrics