with Vyacheslav Fos and Elisabeth Kempf
Abstract: Executive teams in U.S. firms are becoming increasingly politically polarized. We establish this new fact using political affiliations from voter registration records for top executives of S&P 1500 firms between 2008 and 2018. The rise in political homogeneity is explained by both a rising share of Republican executives and increased sorting by partisan executives into firms with like-minded individuals. We further document substantial heterogeneity across party lines in executives’ beliefs, as proxied by their trading of company stock around presidential elections, as well as in firms’ investment decisions.
with Aloisio Araujo, Rafael Ferreira, Spyridon Lagaras, Flavio Morales, and Jacopo Ponticelli
Judicial decisions in bankruptcy are often influenced by the goal of preserving employment in financially distressed firms. Is such pro-labor bias good for workers? We construct a new court-level measure of pro-labor bias based on judges' deviations from the letter of the law, and exploit the random assignment of cases to courts within judicial districts in the state of Sao Paulo in Brazil to study the effect of pro-labor bias on labor market outcomes. Employees whose firms were assigned to a high pro-labor court experience 4.2 percent lower post-bankruptcy earnings relative to employees whose firms were assigned to a low pro-labor court. This negative effect is persistent in the seven-year period after bankruptcy. We provide evidence consistent with this effect being driven by high pro-labor courts disproportionately favoring firm continuation. While employees of liquidated firms experience a large initial drop in earnings upon bankruptcy and a fast convergence to their pre-bankruptcy level, the earnings of employees of reorganized firms remain significantly below their pre-bankruptcy level. Our results indicate that, on average, pro-labor bias can be detrimental for workers' earnings and employment trajectories after bankruptcy.