Can political beliefs, particularly about benefits of war versus peace, move thick financial markets? We document that following an unlikely victory by French citizen-soldiers during the German Siege of Paris (1870), prices of the highly liquid French sovereign bond diverged substantially and persistently there versus elsewhere. While France resisted, Parisian prices were higher and responded…
This paper studies how hiring public officials affects firms’ ability to win government contracts in Japan. We link personnel transitions of public officials to contractors and government contracts awarded to those contractors over time. Using within-firm variation, we find evidence consistent with exchange of post-public employment for increases in government contract awards. Our results suggest…
We review an empirical literature that studies how political polarization affects financial decisions. We first discuss the degree of partisan segregation in finance and corporate America, the mechanisms through which partisanship may influence financial decisions, and available data sources to infer individuals’ partisan leanings. We then describe and discuss the empirical evidence. Our review suggests…
We study the interplay between a “one person-one vote” political system and “one share-one vote” corporate governance regime. The political system sets Pigouvian subsidies, while corporate governance determines firm-specific public good investments. Our analysis highlights a two-way feedback effect. In a frictionless economy, shareholder democracy is irrelevant: the political system fully offsets any effects of…
Can participation in financial markets lead individuals to reevaluate the costs of conflict, change their political attitudes, and even their votes? Prior to the 2015 Israeli elections, we randomly assigned Palestinian and Israeli financial assets to likely voters and incentivized them to actively trade for up to 7 weeks. No political messages or nonfinancial information…
We document that in the wake of the Supreme Court’s Citizens United decision, which increased in the ability of the wealthy to finance political campaigns, the share of total electoral giving attributable to top 1% donors increased by 2.7 times. Further, we find that the voting by U.S. legislators became more responsive to the preferences…