The Political Polarization of Corporate America
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. Departures of politically misaligned executives are value-destroying for shareholders, implying the increasing political polarization of corporate America may not be in the financial interest of shareholders.
We have benefited from comments by Marianne Bertrand, Anil Kashyap, John Matsusaka (discussant), Elena Pikulina (discussant), Antoinette Schoar, Amir Sufi, Luigi Zingales, and participants at AFA, Boston College, Deakin University, Harvard Business School, Indiana University, the London Political Finance Workshop, NYU Law, Penn State, Stanford GSB, University of Chicago (Booth and Harris), University of Arizona, University of Nebraska, University of Oregon, University of Sussex, and UT Austin. We also thank Pietro Bini, Xinyu Cao, Yifang Hong, Daniel Huang, Qiaoqiao Xiang, and Zichen Zhao for excellent research assistance. Kempf gratefully acknowledges financial support from the Initiative on Global Markets, the Fama-Miller Center for Research in Finance, and the Becker Friedman Institute at the University of Chicago. The authors do not have any conflicts of interest to disclose. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.