Skip to main content

Please enter a keyword and click the arrow to search the site

Stock Ownership and Political Behavior: Evidence from Demutualizations

Subject

Finance

Publishing details

Management Science

Authors / Editors

Knüpfer S;Kaustia M;Torstila S

Publication Year

2014

Abstract

We show the behavior of individuals is affected by the type of financial instrument they hold. A natural experiment in which customer-owned mutual companies converted to publicly listed firms created a plausibly exogenous shock to the stock market participation status of tens of thousands of people. We find the shock led to a change in the way people vote in parliamentary elections in the affected areas, with a 10% increase in stock market participation rate being followed by a 1.3%–3.1% increase in right-of-center vote share. The institutional details as well as additional tests suggest that wealth, liquidity, and tax-related incentives cannot fully explain the results. A plausible explanation is that the associated increase in the salience of stock ownership causes a shift in voters’ attention.

Keywords

Stock market participation, political behavior, salience, attention

Series

Management Science

Available on ECCH

No


Select up to 4 programmes to compare

Select one more to compare
×
subscribe_image_desktop 5949B9BFE33243D782D1C7A17E3345D0

Sign up to receive our latest news and business thinking direct to your inbox

×

Sign up to receive our latest course information and business thinking

Leave your details above if you would like to receive emails containing the latest thought leadership, invitations to events and news about courses that could enhance your career. If you would prefer not to receive our emails, you can still access the case study by clicking the button below. You can opt-out of receiving our emails at any time by visiting: https://london.edu/my-profile-preferences or by unsubscribing through the link provided in our emails. View our Privacy Policy for more information on your rights.