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

80 Pages Posted: 16 Aug 2020 Last revised: 1 Oct 2021

See all articles by John M. Bizjak

John M. Bizjak

Texas Christian University

Swaminathan L. Kalpathy

Texas Christian University - M.J. Neeley School of Business

Vassil T. Mihov

Texas Christian University - M.J. Neeley School of Business

Jue Ren

Texas Christian University - M.J. Neeley School of Business

Date Written: October 1, 2021

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

Suggested Citation

Bizjak, John M. and Kalpathy, Swaminathan L. and Mihov, Vassil T. and Ren, Jue, CEO Political Leanings and Store-Level Economic Activity during COVID-19 Crisis: Effects on Shareholder Value and Public Health (October 1, 2021). Journal of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3674512 or http://dx.doi.org/10.2139/ssrn.3674512

John M. Bizjak

Texas Christian University ( email )

Fort Worth, TX 76129
United States
817-257-4260 (Phone)

Swaminathan L. Kalpathy (Contact Author)

Texas Christian University - M.J. Neeley School of Business ( email )

Fort Worth, TX 76129
United States

Vassil T. Mihov

Texas Christian University - M.J. Neeley School of Business ( email )

817-257-7147 (Phone)
817-257-7227 (Fax)

Jue Ren

Texas Christian University - M.J. Neeley School of Business ( email )

Fort Worth, TX 76129
United States

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