Political Alignment between Firms and Employees: The Role of Asset Specificity
Do political preferences of employees align with those of their employers? I argue that firms with more specific assets are more vulnerable to adverse policy changes. Hence, the fate of jobs is tied more closely to the firm and employees are more likely to share political preferences with their employers. However, simultaneously observing both company and employee preferences is difficult in practice. I match 1,691,790 campaign contribution filings of 85,109 employees to 874 publicly listed firms using US campaign finance data between 2003 and 2016. I accomplish this by employing natural language processing to automatically identify employers and occupations. Holding constant individual occupation, I find that employees in companies with more specific assets are more aligned with their employer, and that most variation in alignment is at the industry-level. The results confirm long-standing expectations from trade theory about firm structure and political alignment and stress the continuing importance of sector-based models for political preference formation, despite a current trend towards occupation-based models.