We show that political geography has a pervasive effect on the cross-section of stock returns. We collect election results over a 40-year period and use a political alignment index (PAI) of each state's leading politicians with the ruling (presidential) party to proxy for local firms' proximity...

It is controversial whether governance structure affects the value of the firm. This paper examines the sensitivity of firm value to capital expenditure under various levels of CEO power. The paper uses two measures of CEO power and finds that the greater the power of the CEO the less the...

The optimal view of managerial power theory suggests that corporate boards reward CEOs with power for good firm performance as the boards' assessment of their ability is higher. In evaluating the CEO's quality, economic theory predicts that boards filter out luck from performance. Luck...