Political Connections and Shareholder Support

40 Pages Posted: 11 Dec 2022

See all articles by Magnus Blomkvist

Magnus Blomkvist

EDHEC Business School

Eva Liljeblom

Swedish School of Economics and Business Administration

Anders Löflund

Hanken School of Economics

Etienne Redor

Audencia Nantes School of Management

Date Written: November 25, 2022

Abstract

We study investors’ preferences for corporate political connections in the U.S. using a novel measure; shareholder votes given to individual directors. We find that, after fully accounting for all firm-year specific information and a wide range of director characteristics, that politically connected directors on average do not obtain significantly greater shareholder support. However, during the time-period 2010 to 2016 the board elections echo the nationwide political climate, as directors with ties to the Democratic party receive more shareholder votes. We also find that shareholders have a stronger preference for politically connected directors in heavily regulated industries, suggesting that board members closer to the incumbent government can alleviate regulatory risk. Our study has implications for director selection and the role of political connections in shaping corporate governance practices.

Keywords: Political Connections, Shareholder Support, Board of Directors, Industry Regulation

JEL Classification: G30, G34, G38

Suggested Citation

Blomkvist, Magnus and Liljeblom, Eva and Löflund, Anders and Redor, Etienne, Political Connections and Shareholder Support (November 25, 2022). Available at SSRN: https://ssrn.com/abstract=4285990 or http://dx.doi.org/10.2139/ssrn.4285990

Magnus Blomkvist (Contact Author)

EDHEC Business School ( email )

58 rue du Port
Lille, 59046
France

Eva Liljeblom

Swedish School of Economics and Business Administration ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland
+358-9-431 33 291 (Phone)
+358-9-431 33 393 (Fax)

Anders Löflund

Hanken School of Economics ( email )

PB 287
Helsinki, Vaasa 65101
Finland

Etienne Redor

Audencia Nantes School of Management ( email )

8 route de la Jonelière, BP 31222
Nantes Cedex 3, Cedex 3 44312
France

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