When do Judges Throw the Book at Companies? The Influence of Partisanship in Corporate Prosecutions

69 Pages Posted: 28 Jan 2020 Last revised: 25 Sep 2022

See all articles by Todd A. Gormley

Todd A. Gormley

Washington University in St. Louis; European Corporate Governance Institute (ECGI)

Mahsa Kaviani

University of Delaware

Hosein Maleki

Florida State University - College of Business

Date Written: September 23, 2022

Abstract

We document that partisan views are strongly associated with the level of judicial penalties levied against companies. For example, Republican-appointed judges impose 1,050 percent larger fines for hiring illegal immigrants, while Democrat-appointed judges impose 136 percent larger fines for pollution-related violations. Time-series variation suggests that political partisanship drives these findings, not fixed ideological differences. The differences become amplified before national elections, during periods of greater political polarization, and when higher-court judicial vacancies exist. Evidence also suggests firms are aware of this judicial partisanship and adjust operations accordingly. Our findings illustrate the importance of partisanship and political polarization for US companies.

Keywords: corporate crime, judges, partisanship, political polarization

JEL Classification: G38, K14, K42

Suggested Citation

Gormley, Todd A. and Kaviani, Mahsa and Maleki, Hosein, When do Judges Throw the Book at Companies? The Influence of Partisanship in Corporate Prosecutions (September 23, 2022). Available at SSRN: https://ssrn.com/abstract=3513177 or http://dx.doi.org/10.2139/ssrn.3513177

Todd A. Gormley (Contact Author)

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
(314) 935-7171 (Phone)

HOME PAGE: http://www.gormley.info

European Corporate Governance Institute (ECGI) ( email )

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

Mahsa Kaviani

University of Delaware ( email )

20 Orchard Rd, Newark, DE
Newark, DE 19716
United States

Hosein Maleki

Florida State University - College of Business ( email )

423 Rovetta Business Building
Tallahassee, FL 32306-1110
United States

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