The partisan policy cycle and firm valuation |
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| Affiliation: | 2. West Chester University, Department of Economics and Finance, 304 Anderson Hall, West Chester, PA 19383, United States;1. The World Bank, 1818 H Street, NW, Washington DC 20433, USA;2. Universidad Autónoma de Madrid, Facultad de Económicas y Empresariales (Cantoblanco), C/Francisco Tomás y Valiente, 5, Madrid 28049, Spain;3. Universidad Nacional de Educación a Distancia (UNED) and Real Instituto Elcano: Calle del Príncipe de Vergara, 51, Madrid 28006, Spain |
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| Abstract: | Our research probes the firm valuation impact of partisan-motivated policy cycles. We first identify the micro-channels of policy transmission that link partisan policy disturbances to firm value. Then, we draw on firm-level data from 21 industrial democracies for the period extending from 1989 to 2008 to examine whether government partisanship has any distinct impact on firm value. We identify a surprisingly large and consistent positive relationship of left-oriented governments with firm value. Additionally, our research finds that the partisan impact on firm value is appreciably conditioned by factors like economic openness. |
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