Journal of Financial and Quantitative Analysis Vol. 49 No. 5-6 2014
Corporate Policies of Republican Managers
Abstract
We demonstrate that personal political preferences of corporate managers influence corporate policies. Specifically, Republican managers who are likely to have conservative personal ideologies adopt and maintain more conservative corporate policies. Those firms have lower levels of corporate debt, lower capital and research and development (R&D) expenditures, less risky investments, but higher profitability. Using the 9/11 terrorist attacks and Sept. 2008 Lehman Brothers bankruptcy as natural experiments, we demonstrate that investment policies of Republican managers became more conservative following these exogenous uncertainty-increasing events. Furthermore, around chief executive officer (CEO) turnovers, including CEO deaths, firm leverage policy becomes more conservative when managerial conservatism increases.
- DOI
- 10.1017/s0022109014000702
- Volume
- 49
- Issue
- 5-6
- Pages
- 1279-1310
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex