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Between Scylla and Charybdis: CEO Political Ideology, Dividends and Downsizing During the Pandemic

Ali Bayat, Marc Goergen, Panagiotis Koutroumpis and Xingjie Wei
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Ali Bayat: University of Aberdeen
Panagiotis Koutroumpis: Queen Mary University London
Xingjie Wei: University of Leeds

No 936, Working Papers from Queen Mary University of London, School of Economics and Finance

Abstract: We study whether CEO political ideology affected how S&P 500 firms reacted to the Covid-19 pandemic, an exogenous shock to demand and supply. We hypothesize that conservative CEOs are more likely to adopt shareholder-friendly than employee-friendly reactions to the pandemic. Hence, they should be more likely to downsize their workforce while maintaining dividends. In contrast, other CEOs should be less likely to meet dividend expectations and less likely to downsize. We find confirmation of this hypothesis. We also find that CEOs used the dividend forecasts for 2020 as their benchmark rather than the 2019 dividends to make their dividend decision.

Keywords: CEO political ideology; dividend policy; downsizing; stakeholder management; Covid-19 pandemic (search for similar items in EconPapers)
JEL-codes: G34 G35 M51 (search for similar items in EconPapers)
Date: 2022-01-28
New Economics Papers: this item is included in nep-cfn
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