Rose- and Blue-Colored Glasses: Childhood Exposure to Political Ideology and CEO Overconfidence

44 Pages Posted: 20 Jan 2019 Last revised: 5 Feb 2019

Date Written: January 31, 2019

Abstract

Does who makes government policy matter to CEOs? Using data on the birthplace of US CEOs, I show that CEOs who were born in blue (Democrat) states display overconfidence when there is a Democratic president, whereas CEOs who were born in red (Republican) states display overconfidence when there is a Republican president. The effect is strongest when the CEO grew up during a time of high state-level economic growth suggesting the CEO forms a positive association between the party and the party's stewardship of the economy. Surprisingly, however, there is no evidence that CEOs' personal political beliefs predict overconfidence.

Keywords: CEO Political Ideology, Investment, Overconfidence

JEL Classification: G31, G38, G40, H32

Suggested Citation

Schwartz, Andrew, Rose- and Blue-Colored Glasses: Childhood Exposure to Political Ideology and CEO Overconfidence (January 31, 2019). Available at SSRN: https://ssrn.com/abstract=3313622 or http://dx.doi.org/10.2139/ssrn.3313622

Andrew Schwartz (Contact Author)

Seton Hall University ( email )

400 S Orange Avenue
South Orange, NJ 07079
United States

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