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 can result in benefits for a firm’s shareholders but comes at a potential cost to public health. Using novel retail store-level data, we examine how a CEO’s political leanings, measured by political donations, impacts this tradeoff. We document that firms with Republican-leaning CEOs experience a relative increase in store visits compared to firms with Democrat-leaning CEOs. The increase in store visits is associated with 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.