Are Judges Like Umpires? Political Affiliation and Corporate Prosecutions

Abstract

Using the random assignment of judges to corporate criminal cases, we document that, on average, judges appointed by a Democrat president impose larger monetary damages for crimes that Democrats are more likely to view as important (i.e., violations of environmental and labor regulations) while Republican-appointed judges impose larger fines for crimes that Republicans are more likely to view as important (i.e., the hiring of illegal immigrants). These differences are amplified during time periods of greater political partisanship and are robust to controlling for other judicial characteristics (e.g., age, race, and gender). There is no evidence, however, that judges’ political affiliations are associated with decisions on guilt. The findings suggest that shifts in judicial political affiliations and increased political polarization have the potential to affect firms’ investment and hiring decisions.

Keywords: corporate crime, judges, politics, bias

JEL Classification: G38, K14, K42