The Political Economy of Firm Networks: CEO Ideology and Global Trade

Elisabeth Kempf, Mancy Luo and Margarita Tsoutsoura

No 33712, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine how the political ideology of corporate leaders shapes cross-border firm networks. Exploiting changes in ideological alignment between U.S. firm CEOs and foreign governments around close foreign elections, we show that U.S. firms are more likely to terminate trade relationships with countries led by governments whose ideology becomes more distant from that of their CEOs. The impact is concentrated among CEOs holding strong political views, and is particularly pronounced for shorter trade relationships, suggesting ideological alignment is more relevant in more flexible and substitutable connections. Our findings highlight the role of ideology in shaping the formation and persistence of international firm networks.

JEL-codes: F1 G41 (search for similar items in EconPapers)
Date: 2025-04
New Economics Papers: this item is included in nep-pol
Note: CF ITI POL
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