CEO Political Leanings and Store-Level Economic Activity during COVID-19 Crisis: Effects on Shareholder Value and Public Health

Abstract

Maintaining economic output during COVID-19 pandemic results in benefits for a firm’s shareholders but comes at a potential cost to public health. Using store-level data, we examine how a CEO’s political leanings impact this tradeoff. We document that firms with Republican-leaning CEOs experience a relative increase in store visits compared to firms with Democratic-leaning CEOs. The increase in store visits is associated with higher sales and positive abnormal stock returns. However, we also document higher COVID-19 transmission rates and more employee safety complaints in communities where establishments with higher store traffic are managed by Republican-leaning CEOs.

Keywords: CEO, Coronavirus, COVID-19, Political Donations, Political Partisanship, SARS-CoV-2, Shareholder Value, Social Distancing

JEL Classification: D21, D72, G14, G30, G38, H12, H75, I12, I18, M14, P16, P48