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An Anatomy of Firms’ Political Speech

Author

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  • Pablo Ottonello
  • Wenting Song
  • Sebastian Sotelo

Abstract

We study the distribution of political speech across U.S. firms. We develop a measure of political engagement based on firms’ communications (earning calls, regulatory filings, and social media) by training a large language model to identify statements that contain political opinions. Using these data, we document five facts about firms’ political engagement: (1) Political engagement is rare among firms; (2) Political engagement is concentrated among large firms; (3) Firms tend to specialize in specific topics and outlets; (4) Large firms tend to engage in a wider set of topics and outlets; (5) The 2020 surge in firms’ political engagement was associated with an increase in the engagement of medium-sized firms and a change in the mix of political topics.

Suggested Citation

  • Pablo Ottonello & Wenting Song & Sebastian Sotelo, 2024. "An Anatomy of Firms’ Political Speech," Staff Working Papers 24-37, Bank of Canada.
    • Handle: RePEc:bca:bocawp:24-37
    DOI: 10.34989/swp-2024-37
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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