Margarita Tsoutsoura, Washington University-St. Louis
Qiping Xu, University of Illinois-Urbana-Champaign
Abstract: We study how leadership ideology shapes workforce composition in publicly listed U.S. firms. Using matched CEO–employee voter registration data, we show that CEO party changes are followed by a substantial increase in the share of workers who are politically aligned with the new CEO party affiliation. This realignment effect is driven primarily by a composition change among new hires, though within-worker changes in political affiliation also play a meaningful role. The effect remains robust when we exploit CEO deaths and illnesses as exogenous drivers of CEO party changes. The results reveal a "trickle-down ideology" mechanism through which leadership ideology influences the allocation of talent across firms, contributing to partisan segregation in the U.S. labor market.
Discussant: William Mullins, University of California-San Diego
Utpal Bhattacharya, Hong Kong University of Science & Technology
Tse-Chun Lin, University of Hong Kong
Janghoon Shon, University of New South Wales
Abstract: We study whether restrictions on political speech distort financial speech by exploiting the introduction of the National Security Law (NSL) in Hong Kong. After the NSL’s enactment, local sell-side equity analysts covering the same firms as foreign analysts exhibit systematic self-censorship: when firm-specific bad news arrives, they issue more optimistic earnings forecasts, write in less precise language, and respond more slowly to earnings announcements. This pattern is more pronounced for central state-owned enterprises, as negative opinions on their poor performance may be deemed “unpatriotic.” Markets discount these rosier reports, indicating that investors partially anticipate and price in this informational distortion.
Abstract: We examine how congressional representation affects local housing markets through its influence on housing finance. Using the near-universe of U.S. housing transactions from 1990 to 2020 linked to congressional districts, we exploit the staggered entry andexit of representatives from the House Financial Services Committee (FSC) as plausibly exogenous shocks to their influence over housing and mortgage policy. A border design comparing properties within five kilometers of adjacent districts holds local economic conditionsconstant. House prices increase by about 4 percent when a district’s representative joins the FSC and decline by a similar amount when the representative leaves. These effects coincide with higher mortgage origination, greater government-sponsored enterprise (GSE) purchases, and higher conforming loan limits, but no change in construction activity or allocations of Low-Income Housing Tax Credit programs. Representation on the FSC affects local housing markets primarily through credit supply, leading to localized changes in property values.
