Political Polarization and Finance

Elisabeth Kempf and Margarita Tsoutsoura ()
Additional contact information
Elisabeth Kempf: National Bureau of Economic Research, Cambridge, Massachusetts, USA
Margarita Tsoutsoura: Olin Business School, Washington University in St. Louis, St. Louis, Missouri, USA

Annual Review of Financial Economics, 2024, vol. 16, issue 1, 413-434

Abstract: 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 the available data sources used to infer individuals’ partisan leanings. We then describe and discuss the empirical evidence. Our review suggests an economically large and often growing partisan gap in the financial decisions of households, corporate executives, and financial intermediaries. Partisan alignment between individuals explains team and financial relationship formation, with initial evidence suggesting that high levels of partisan homogeneity may be associated with economic costs. We conclude by proposing several promising directions for future research.

Keywords: governance; corporate finance; investment decisions; portfolio choice; political polarization; partisanship (search for similar items in EconPapers)
JEL-codes: G11 G30 G34 G40 M12 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1146/annurev-financial-110921-010439
Full text downloads are only available to subscribers. Visit the abstract page for more information.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:anr:refeco:v:16:y:2024:p:413-434

Ordering information: This journal article can be ordered from
http://www.annualreviews.org/action/ecommerce

DOI: 10.1146/annurev-financial-110921-010439

Access Statistics for this article

More articles in Annual Review of Financial Economics from Annual Reviews Annual Reviews 4139 El Camino Way Palo Alto, CA 94306, USA.
Bibliographic data for series maintained by http://www.annualreviews.org ().