Changes in the electorate and firm values: evidence from the introduction of female suffrage in Switzerland

This paper analyzes the effect of the composition of the electorate on corporate prospects. Electorates constantly change, and support-maximizing policymakers adjust their legislative behavior to accommodate shifts in voter preferences. If the policy adjustments affect individual firms or entire industries, anticipating the effects is crucial for corporate decision-makers. I analyze a large-scale shock to the composition of the electorate — the introduction of female suffrage in Switzerland in 1971. I compile a hand-collected dataset on Swiss security prices and firm level data. In a first step, I quantify investor responses in capital markets around the date of the referendum. I then apply a Difference-in-Differences approach and show that firm profitability is sensitive to expected changes in government policies that reflect female voters’ preferences. The results emphasize that considering the evolution of the electorate and its impact on policymaking should be an integral part of corporate strategies.