The Value of Manager Partisanship
52 Pages Posted: 22 Feb 2021 Last revised: 9 Mar 2021
Date Written: March 9, 2021
We investigate the role and value of manager partisanship to U.S. corporations. Using party-specific natural experiments, we find that firms gain greater abnormal returns when shocks favor political party with which firm managers align. We document that politicians are more likely to join firms as directors and personally invest in firms sharing similar partisan view, suggesting political similarity can foster preferential views. On the other hand, firms with manager partisanship leaning toward the political party of the U.S. president gain easier access to the White House, get more federal procurements, and receive less unfavorable regulatory actions. Our results suggest that manager partisanship affects how firms connect in the U.S. two-party politics and is of significant value to firms.
Keywords: manager partisanship, firm value, political similarity, polarization
JEL Classification: P16, G32
Suggested Citation: Suggested Citation