Event Details

Accounting and Finance, Accounting research seminar to be presented by Professor Gilles Hilary (Georgetown University). Paper title: Partisan Alignment and Corporate Coordination

Gilles Hilary: Georgetown University

Abstract:

We examine how political alignment among executives influences firm coordination and

profitability. Shared political beliefs facilitate collaboration among market participants that is

conducive to economic rents. We find that greater intra-industry political alignment correlates

with higher profitability. Instrumental variable, quasi-natural experiment specifications, and

multiple comparative statics support a causal interpretation. Firms in politically homogenous

environments are more likely to be investigated by regulators and civilly sued for antitrust

violations. Turning our attention to the mechanisms, we find that firms that benefit from

political alignment engage in greater mutual monitoring and joint lobbying. They experience

higher margins (rather than higher asset turnover) and more synchronized sales. The effect is

stronger in markets characterized by price—rather than quantity—competition.

Keywords: Partisanship, Political Alignment, Coordination, Trust, Profitability