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 Spyridon Lagaras, Maria-Teresa Marchica and Elena Simintzi
We examine the sources and evolution of the gender pay gap in finance, using administrative micro data from the U.K. for 1997-2019. We show a persistently larger gender pay gap in finance, compared to other sectors. Exploiting employees who switch firms, we find the gender pay gap in finance is predominantly explained by more skilled male employees sorting into finance relative to other sectors. The gender pay gap in finance is relatively lower for flexible occupations, in firms that offer childcare benefits and in more female friendly environments. Over time, higher investment in human capital for women and sorting in high-skilled occupations within the sector as well as policy interventions have reduced the gender pay gap in finance.