The Political Polarization of Corporate America

60 Pages Posted: 29 Mar 2022 Last revised: 22 Jan 2024

See all articles by Vyacheslav Fos

Vyacheslav Fos

Boston College - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Elisabeth Kempf

Harvard University - Business School (HBS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Margarita Tsoutsoura

Washington University in Saint Louis, John M. Olin Business School

Multiple version iconThere are 2 versions of this paper

Date Written: August 15, 2023

Abstract

Executive teams in U.S. firms are becoming increasingly partisan. We establish this new fact using political affiliations from voter registration records for top executives of S&P 1500 firms between 2008 and 2020. The new fact is explained by both an increasing share of Republican executives and increased assortative matching by executives on political affiliation. Executives who are misaligned with the political majority of their team are more likely to leave the firm, especially in recent years, and their company's stock price responds negatively to the announcement of their departure. Combined, our findings indicate that the increasing political polarization of corporate America may not be in the financial interest of shareholders.

Suggested Citation

Fos, Vyacheslav and Kempf, Elisabeth and Tsoutsoura, Margarita, The Political Polarization of Corporate America (August 15, 2023). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2022-77, George J. Stigler Center for the Study of the Economy & the State Working Paper No. 313, Available at SSRN: https://ssrn.com/abstract=4142685 or http://dx.doi.org/10.2139/ssrn.4142685

Vyacheslav Fos

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Elisabeth Kempf (Contact Author)

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Margarita Tsoutsoura

Washington University in Saint Louis, John M. Olin Business School ( email )

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