When a state's governor's party changes in a close election, local companies suddenly stop updating their boards of directors.
April 1, 2026
Original Paper
When Governors Flip, Boards Pause
SSRN · 6502641
The Takeaway
Contrary to the idea that companies immediately reshuffle to adapt to a new political regime, they actually 'freeze' visible board turnover by about 14%. They pause for months to assess the new administration before eventually expanding and hiring directors with specific political connections.
From the abstract
I study how public firms adjust visible governance turnover after close gubernatorial elections. The central fact is a mirror image. When a close election flips the governor's party, firms file fewer Item 5.02 disclosures reporting director and officer turnover. When an equally close election leaves party control in place, filings increase. Linking SEC filings, BoardEx, Compustat, and gubernatorial elections for 9,283 firms across 271 elections from 2004 to 2024, I show that broad regime change