Recent Papers
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 Elisabeth Kempf, Mancy Luo, and Larissa Schäfer
Abstract: Does partisan perception shape the flow of international capital? We provide evidence from two settings, syndicated corporate loans and equity mutual funds, to show that ideological alignment with foreign governments affects the cross-border capital allocation by U.S. institutional investors. Moreover, we find that ideological alignment with foreign countries also affects investments of non-U.S. investors and can explain patterns in bilateral FDI flows. Our empirical strategy ensures that direct economic effects of foreign elections or bilateral ties between countries are not driving the result. Combined, our findings imply that partisan perception is a global phenomenon and its economic effects transcend national borders.
with Aloisio Araujo, Rafael Ferreira, Spyridon Lagaras, Flavio Morales, and Jacopo Ponticelli
R&R at the Review of Financial Studies
Abstract: Judicial decisions in bankruptcy are often influenced by the goal of preserving employment. Using the text of judicial decisions and the random assignment of cases across courts in the state of Sao Paulo in Brazil, we construct a novel court-level measure of pro-labor bias and study its effect on labor market outcomes. Employees of distressed firms assigned to high pro-labor courts are more likely to stay with their employer; however, they experience a 4.5% decline in earnings. This effect is driven by wage adjustments, it is stronger for workers with better outside options, and concentrated in periods of economic expansion.