Political Ideology and International Capital Allocation
Elisabeth Kempf, Mancy Luo, Larissa Schäfer, Margarita Tsoutsoura
Journal of Financial Economics,
No. 2,
2023
Abstract
Does investors’ political ideology shape international capital allocation? We provide evidence from two settings—syndicated corporate loans and equity mutual funds—to show ideological alignment with foreign governments affects the cross-border capital allocation by U.S. institutional investors. Ideological alignment on both economic and social issues plays a role. Our empirical strategy ensures direct economic effects of foreign elections or government ties between countries are not driving the result. Ideological distance between countries also explains variation in bilateral investment. Combined, our findings imply ideological alignment is an important, omitted factor in models of international capital allocation.
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On the Effect of Business and Economic University Education on Political Ideology: An Empirical Note
Manthos D. Delis, Iftekhar Hasan, Maria Iosifidi
Journal of Business Ethics,
2019
Abstract
We empirically test the hypothesis that a major in economics, management, business administration or accounting (for simplicity referred to as Business/Economics) leads to more-conservative (right-wing) political views. We use a panel dataset of individuals (repeated observations for the same individuals over time) living in the Netherlands, drawing data from the Longitudinal Internet Studies for the Social Sciences from 2008 through 2013. Our results show that when using a simple fixed effects model, which fully controls for individuals’ time-invariant traits, any statistically and quantitatively significant effect of a major in Business/Economics on the Political Ideology of these individuals disappears. We posit that, at least in our sample, there is no evidence for a causal effect of a major in Business/Economics on individuals’ Political Ideology.
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National Politics and Bank Default Risk in the Eurozone
Stefan Eichler, Karol Sobanski
Journal of Financial Stability,
October
2016
Abstract
We study the impact of national politics on default risk of eurozone banks as measured by the stock market-based Distance to Default. We find that national electoral cycles, the power of the government as well as the government’s party ideological alignment significantly affect the stability of banks in the eurozone member countries. Moreover, we show that the impact of national politics on bank default risk is more pronounced for large as well as weakly capitalized banks.
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CEO Political Preference and Corporate Tax Sheltering
Bill Francis, Iftekhar Hasan, Xian Sun, Qiang Wu
Journal of Corporate Finance,
2016
Abstract
We show that firms led by politically partisan CEOs are associated with a higher level of corporate tax sheltering than firms led by nonpartisan CEOs. Specifically, Republican CEOs are associated with more corporate tax sheltering even when their wealth is not tied with that of shareholders and when corporate governance is weak, suggesting that their tax sheltering decisions could be driven by idiosyncratic factors such as their political ideology. We also show that Democratic CEOs are associated with more corporate tax sheltering only when their stock-based incentives are high, suggesting that their tax sheltering decisions are more likely to be driven by economic incentives. In sum, our results support the political connection hypothesis in general but highlight that the specific factors driving partisan CEOs' tax sheltering behaviors differ. Our results imply that it may cost firms more to motivate Democratic CEOs to engage in more tax sheltering activities because such decisions go against their political beliefs regarding tax policies.
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The Development of Cities and Municipalities in Central and Eastern Europe: Introduction for a Special Issue of 'Urban Research and Practice'
Martin T. W. Rosenfeld, Albrecht Kauffmann
Urban Research & Practice, Vol. 7 (3),
No. 3,
2014
Abstract
Since the 1990s, local governments in Central and Eastern European (CEE) countries have been confronted by completely new structures and developments. This came after more than 40 years (or even longer in the case of the former Soviet Union) under a socialist regime and behind an iron curtain which isolated them from the non-socialist world. A lack of resources had led to an underinvestment in the refurbishment of older buildings, while relatively cheap ‘prefabricated’ housing had been built, not only in the outskirts of cities, but also within city centres. A lack of resources had also resulted in the fact that the socialist regimes were generally unable to replace old buildings with ‘modern’ ones; hence, there is a very rich heritage of historical monuments in many of these cities today. The centrally planned economies and the development of urban structures (including the shifts of population between cities and regions) were determined by ideology, political rationality and the integration of all CEE countries into the production schemes of the Council for Mutual Economic Assistance and its division of labour by location. The sudden introduction of a market economy, private property, democratic rules, local autonomy for cities and municipalities and access to the global economy and society may be seen as a kind of ‘natural experiment’. How would these new conditions shape the national systems of cities and municipalities? Which cities would shrink and which would grow? How would the relationship between core cities and their surrounding municipalities develop? And what would happen within these cities and with their built environment?
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