Stock Market Aversion? Political Preferences and Stock Market Participation

Partisan Professionals: Evidence from Credit Rating Analysts

“…Furthermore, our study contributes to the literature that studies how political affiliation correlates with the behavior of financial analysts, sell-side equity analysts, corporate managers, investment managers, and investors. Prior studies have documented that mutual-fund managers who make campaign donations to the Democratic party hold less of their portfolios in companies that are deemed socially irresponsible (Hong and Kostovetsky (2012)), left-wing voters are less likely to invest in stocks (Kaustia and Torstila (2011)), sell-side equity analysts who make political contributions to the Republican Party are less likely to issue bold recommendations (Jiang, Kumar, and Law (2016)), and Republican firm managers maintain more conservative corporate policies (Hutton, Jiang, and Kumar (2014)). These studies focus on the time-invariant attributes that characterize Democrats versus Republicans, whereas we focus on how the behavior of analysts changes depending on whether their preferred party is in power.…”

The cost of sin: The effect of social norms on audit pricing

“…Thirdly, we test whether political geography has an impact upon audit pricing. Prior literature suggests that political values have an impact on economic outcomes (Giuli & Kostovetsky, 2011;Kaustia & Torstila, 2011). In comparison with the Republicans, who may to some extent support "sin" firm operations (see Jeffrey, 2011), the Democratic Party has placed considerably more emphasis on corporate social responsibility and has taken a public stance against social and environmental externalities.…”

“…In comparison with the Republicans, who may to some extent support "sin" firm operations (see Jeffrey, 2011), the Democratic Party has placed considerably more emphasis on corporate social responsibility and has taken a public stance against social and environmental externalities. For instance, the Democratic Party has, inter alia, favored stricter gun control, higher taxes on tobacco products and smoking bans, as well as stronger environmental protection 9 (Giouli & Kostovetsky, 2011; Hong & Kostovetsky, 2010;Kaustia & Torstila, 2011;Rubin, 2008). Hence, in areas where the Democratic Party is the dominant political force, "sin" firms are expected to encounter intense hostility (i.e., restrictive state interventions, litigations and negative press coverage) which may further increase the risks associated with their audits, leading auditors to devote more time and resources to completing audits.…”

Pension Returns and Popular Support for Neoliberalism in Post-Pension Reform Latin America

“…Individual level controls are included to address the possibility that FDC pension participants are intrinsically more market-acceptant, and thus more open to neoliberalism (e.g. Kaustia and Torstila 2011). The controls I include measures attributes that plausibly influence respondents' underlying level of market acceptance, as well as the likelihood that they would be enrolled in an FDC pension system: age, gender, years of education, income, and employment type (dummy variables indicating whether the respondent is a public sector employee, a private sector employee, a private sector employer, an informal sector worker, a volunteer or not working).…”