Stock Ownership and Political Behavior: Evidence from Demutualizations
Subject
Finance
Publishing details
Management Science
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
