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CEO Political Leanings and Store‐Level Economic Activity during the COVID‐19 Crisis: Effects on Shareholder Value and Public Health
Author(s) -
BIZJAK JOHN M.,
KALPATHY SWAMINATHAN L.,
MIHOV VASSIL T.,
REN JUE
Publication year - 2022
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/jofi.13173
Subject(s) - shareholder , covid-19 , politics , shareholder value , democracy , value (mathematics) , stock (firearms) , business , pandemic , public health , monetary economics , finance , economics , corporate governance , political science , law , medicine , mechanical engineering , disease , pathology , machine learning , computer science , infectious disease (medical specialty) , engineering , nursing
Maintaining economic output during the COVID‐19 pandemic results in benefits for firm shareholders but comes at a potential cost to public health. Using store‐level data, we examine how a CEO's political leaning impacts this trade‐off. We document that firms with a Republican‐leaning CEO experience a relative increase in store visits compared to firms with a Democratic‐leaning CEO. The increase in store visits is associated with higher sales and positive abnormal stock returns. However, we also document higher COVID‐19 transmission rates and more employee safety complaints in communities where establishments with higher store traffic are managed by a Republican‐leaning CEO.