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Political Activism and Firm Innovation

Author

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  • Ovtchinnikov, Alexei V.
  • Reza, Syed Walid
  • Wu, Yanhui

Abstract

We hypothesize that political activism is valuable because it helps reduce political uncertainty, which, in turn, fosters firm innovation. We find that firms that support more politicians, winning politicians, politicians on congressional committees with jurisdictional authority over the firms’ industries, and politicians who join those committees innovate more. We employ a natural experiment to show a causal effect of political activism on innovation. We also show evidence of intra-industry and geographical political activism spillovers.

Suggested Citation

  • Ovtchinnikov, Alexei V. & Reza, Syed Walid & Wu, Yanhui, 2020. "Political Activism and Firm Innovation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 55(3), pages 989-1024, May.
    • Handle: RePEc:cup:jfinqa:v:55:y:2020:i:3:p:989-1024_9
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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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