Abstract
Before your next U.S. acquisition, check how the company's home state votes. Our research shows that the performance of buyouts in red Republican states is likely to be above average, while buyout performance in blue Democratic states is likely to fall below the mean. (See map.) This finding held even after controlling for a dozen other factors that could explain performance differences, including the target firm's size, the historical performance of buyouts in its sector, and the performance of the acquiring firm. We argue that Republican views are better aligned with buyout value-creation strategies (such as outsourcing labor, shutting down less efficient units, lower commitment to social responsibility, and deunionization) than Democratic views are.
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