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Stock ownership and political behavior: Evidence from demutualization

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  • Kaustia, Markku
  • Knüpfer, Samuli
  • Torstila, Sami
Abstract
A setting in which customer-owned mutual companies converted to publicly listed firms created a plausibly exogenous shock to salience of stock ownership. We use this shock to identify the effect of stock ownership on political behavior. Using IV regressions, difference-in-differences analyses, and matching methods, we find the shock changed the way people vote in the affected areas, with the demutualizations being followed by a 1.7–2.7 percentage points increase in rightof- center vote share. Analyses of demutualizations that did not involve public listing of shares suggest that explanations based on wealth, liquidity, and tax-related incentives do not drive the results.

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  • Kaustia, Markku & Knüpfer, Samuli & Torstila, Sami, 2013. "Stock ownership and political behavior: Evidence from demutualization," SAFE Working Paper Series 2, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewp:2
    DOI: 10.2139/ssrn.2209645
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    2. Ljungqvist, Alexander & Persson, Lars & Tåg, Joacim, 2016. "The Incredible Shrinking Stock Market: On the Political Economy Consequences of Excessive Delistings," Working Paper Series 1115, Research Institute of Industrial Economics, revised 06 Feb 2018.
    3. Alexander Ljungqvist & Lars Persson & Joacim Tåg, 2016. "Private Equity's Unintended Dark Side: On the Economic Consequences of Excessive Delistings," NBER Working Papers 21909, National Bureau of Economic Research, Inc.
    4. López, Fernando & Rosas, Guillermo, 2022. "COVID-19 and attitudes towards early withdrawal of pension funds: The role of trust and political ideology," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    5. Liu, Weihua & Wang, Siyu & Lin, Yong & Xie, Dong & Zhang, Jiahui, 2020. "Effect of intelligent logistics policy on shareholder value: Evidence from Chinese logistics companies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
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    More about this item

    Keywords

    Stock market participation; political behavior; salience; attention;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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