Brand Political Positioning: Implications of the 2016 US Presidential Election (original) (raw)

50 Pages Posted: 10 Nov 2020

Date Written: August 15, 2020

Abstract

The heightened polarization in the US political landscape and the increased emphasis on personal values and identity in politics create important externalities affecting the functioning of commercial entities in the marketplace. We discuss the construct of a brand’s political positioning—the extent to which the perceptual profile (brand image) of a commercial entity aligns with the perceptual profile of a major political party—and show its effects on firm valuation and sales in the aftermath of the 2016 US presidential election. We propose a mechanism to explain the observed performance effects—consumers’ shifting preferences toward (away from) the brands perceptually associated with the winning (losing) political party. We present evidence supporting this mechanism: the documented valuation effects are stronger for consumer-facing firms, the sales react immediately after the election (fourth quarter of 2016), and the firm value is tied to the public sentiment toward the political entity to which the corporate brand is perceptually similar.

Keywords: Brand Positioning, Polarization, US Politics, Event Study, Dynamic Panel-Data Models, Calendar-Time Portfolio Analysis

JEL Classification: M31

Suggested Citation: Suggested Citation

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