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Firm partisan positioning, polarization, and risk communication: Examining voluntary disclosures on COVID-19.

ABSTRACT: Research Summary:The COVID-19 pandemic will rank among the greatest challenges many executives will have faced and not only due to the operational challenges it posed. Upon entering the U.S. context, the disease was immediately politically polarized, with clear partisan splits forming in risk perceptions of the disease unrelated to science. We exploit this context to examine whether firms' partisan positioning affects whether and how they communicate risk to their investors on a polarized public policy issue. To do so, we examine the covariation between firms' disclosure of COVID-19 risks and the partisanship of their political giving. Our analysis of earnings call and campaign contribution data for the S&P 500 reveals a positive association between a firm's contributions to Democrats and its disclosure of COVID-19 risks. Managerial Summary:From its onset in the United States, attitudes toward and discourse around the COVID-19 pandemic was heavily politicized and perceptions of the disease's risks were seen as more serious by Democratic-identifying individuals than Republican identifiers. In this study, we examine whether this pattern also holds for U.S. publicly traded firms, who can also stake out a political position through their corporate political action committee campaign contributions. In analyses of earnings call transcripts from the first quarter of 2020, we show that the more Republican-leaning (Democrat-leaning) a firm's campaign contributions are, the less (more) likely it was to voluntarily disclose risks related to COVID-19. We argue that these findings hold implications for parties interested in interpreting firm's risk disclosures on politically polarized issues.

SUBMITTER: Benton RA

PROVIDER: S-EPMC8661910 | biostudies-literature |

REPOSITORIES: biostudies-literature

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Project description:The COVID-19 pandemic is a global crisis that has been testing every society and exposing the critical role of local politics in crisis response. In the United States, there has been a strong partisan divide between the Democratic and Republican party's narratives about the pandemic which resulted in polarization of individual behaviors and divergent policy adoption across regions. As shown in this case, as well as in most major social issues, strongly polarized narrative frameworks facilitate such narratives. To understand polarization and other social chasms, it is critical to dissect these diverging narratives. Here, taking the Democratic and Republican political social media posts about the pandemic as a case study, we demonstrate that a combination of computational methods can provide useful insights into the different contexts, framing, and characters and relationships that construct their narrative frameworks which individual posts source from. Leveraging a dataset of tweets from the politicians in the U.S., including the ex-president, members of Congress, and state governors, we found that the Democrats' narrative tends to be more concerned with the pandemic as well as financial and social support, while the Republicans discuss more about other political entities such as China. We then perform an automatic framing analysis to characterize the ways in which they frame their narratives, where we found that the Democrats emphasize the government's role in responding to the pandemic, and the Republicans emphasize the roles of individuals and support for small businesses. Finally, we present a semantic role analysis that uncovers the important characters and relationships in their narratives as well as how they facilitate a membership categorization process. Our findings concretely expose the gaps in the "elusive consensus" between the two parties. Our methodologies may be applied to computationally study narratives in various domains.Supplementary informationThe online version contains supplementary material available at 10.1140/epjds/s13688-021-00308-4.

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Firm partisan positioning, polarization, and risk communication: Examining voluntary disclosures on COVID-19.

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