Stock ownership and political behavior: evidence from demutualizations

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 changed the way people vote in the affected areas, with a 10% increase in share-ownership rate being followed by a 1.3%–3.1% increase in right-of-center vote share. The institutional details and 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

The Exit Rates of Liquidated Venture Capital Funds

Exit rates provide a simple yet practical measure for evaluating and benchmarking the performance of venture capital funds. We create a sample of 138 liquidated U.S. venture capital funds and investigate the outcomes of their 4,549 portfolio companies. We study exit rates, proportions of different exit routes, and their determinants. The median fund in our sample exited 19% of portfolio companies through an IPO, 7% through a sale of listed equity, and 23% through mergers or acquisitions. There exist, however, interesting differences between fund types: In particular, large funds and fund management firms have significantly higher exit rates

Stock market aversion? Political preferences and stock market participation

We find that left-wing voters and politicians are less likely to invest in stocks, controlling for income, wealth, education, and other relevant factors. This finding from unique data sets in Finland is robust both at the zip code and at the individual level. A moderate left voter is 17-20% less likely to own stocks than a moderate right voter. The results are consistent with the idea that personal values are a factor in important investment decisions, in this case leading to "stock market aversion." The results are inconsistent with alternative explanations such as wealth effects, risk aversion, reverse causality, return expectations, or social capital.Household finance Limited participation Political preference

Irrevocable Commitments and Tender Offer Outcomes

Irrevocable commitments (ICs) are undertakings by target‐firm blockholders to accept an upcoming takeover bid before its announcement. Using a novel manually‐collected dataset, we develop three new hypotheses and explore one existing hypothesis to explain the use of ICs: (1) trade‐off between speed and price; (2) trade‐off between completion probability and price; (3) differences in bargaining power, and (4) blockholder certification. Transactions with more than 20% of shares irrevocably committed have a 7–16% higher probability of tender offer completion and 8–10 days shorter bid duration. A transaction with an average‐sized irrevocable commitment is associated with a 2.9 percentage points lower four‐week bid premium than a transaction with no irrevocable commitment. Overall, the results appear most consistent with the hypothesis on completion probability versus price. The results also offer partial evidence in favor of the certification hypothesis.Peer reviewe

Cross-border relocations of headquarters in Europe

This paper analyzes the relocations of both corporate and regional headquarters (HQ) in a multi-country setting. On the basis of a dataset of 52 cross-border HQ relocations in Europe during 1996–2006, we document an increasing trend toward relocation, push and pull factors affecting HQ location choice, and catalyzing factors that affect the relocation decision. High taxes and a high employment rate represent push factors that we find to increase the likelihood of HQ relocation. In particular, at the mean rate of corporate tax, a one percentage point increase in tax translates into a 6.8% increase in HQ relocation likelihood. In contrast, central location and low taxes represent pull factors that increase the attractiveness of the HQ location. In terms of catalyzing factors, we find that export-oriented companies and regional HQ have a higher tendency to relocate. As a whole, we extend the existing research by putting forward a conceptual framework of HQ relocation decisions, and by providing novel empirical evidence on the HQ relocation phenomenon. Our findings contribute to an improved understanding of the determinants of corporate HQ relocation decisions, and provide important tax policy considerations for public policy decision-makers in individual European countries and in the European Commission.