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Political Activism and Firm Innovation

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

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.

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Corresponding author

*Ovtchinnikov (corresponding author), ovtchinnikov@hec.fr, HEC Paris; Reza, sreza@binghamton.edu, SUNY at Binghamton; and Wu, sean.wu@qut.edu.au, Queensland University of Technology.

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1

We thank Bill Christie, Dave Denis, Art Durnev, Mara Faccio, Johan Hombert, Elena Loutskina, Ron Masulis, Clemens Otto, David Parsley, Jacob Sagi, Amit Seru, Alex Stomper, Philip Valta, and seminar participants at HEC Montreal, the University of Guelph, the University of Wyoming, and SUNY at Binghamton for helpful comments. The usual disclaimer applies.

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Political Activism and Firm Innovation

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

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