Polarized Corporate Boards

60 Pages Posted: 29 Jan 2021 Last revised: 27 Jan 2022

See all articles by Thao Hoang

Thao Hoang

Australian National University

Phong T. H. Ngo

Australian National University (ANU)

Le Zhang

Australian National University (ANU) - College of Business and Economics

Date Written: January 26, 2022


We show that political polarization among directors negatively impacts corporate board effectiveness by reducing the CEO forced turnover-performance sensitivity. Our results are more pronounced in presidential election years and for firms with more monitoring and advising needs. Polarization also increases the departure likelihood for directors who are ideologically distant from the rest of the board, making boards more politically homogeneous over time. Finally, we show that polarization in the boardroom lowers firms’ investment-Q sensitivity and environmental performance. Our findings highlight the real economic cost of political polarization.

Keywords: Political polarization, Board of directors, CEO turnover, Corporate policy

JEL Classification: P16, G30

Suggested Citation

Hoang, Thao and Ngo, Phong T. H. and Zhang, Le, Polarized Corporate Boards (January 26, 2022). Available at SSRN: https://ssrn.com/abstract=3747607 or http://dx.doi.org/10.2139/ssrn.3747607

Thao Hoang

Australian National University ( email )

Canberra, Australian Capital Territory 2601

Phong T. H. Ngo (Contact Author)

Australian National University (ANU) ( email )

RSFAS, College of Business and Economics
Australian National University
Canberra, Australian Capital Territory 0200
+61 2 6125 1079 (Phone)

HOME PAGE: http://cbe.anu.edu.au/people/rsfas/phong-ngo/

Le Zhang

Australian National University (ANU) - College of Business and Economics ( email )


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