Essays exploring the impact of socioeconomic and political factors on corporate performance

This thesis comprises three studies exploring the impact of income inequality on firm performance and political influence on gender parity within Canadian corporate boards. The issues addressed here are varied but connected to highlight "How socioeconomic and political transitions affect the corporate outcomes?". The following are the brief summaries of three studies: In the first study, Sentiment Inequality (SI) is introduced to capture the difference in consumer sentiment between high- and low-income groups. It is hypothesized that SI can be used to predict the relative performance of high-end versus low-end product firms. A case study illustrates how variations in SI can predict the comparative performance of casual dining versus fast-food companies. Across the economy, it is hypothesized and shown that more cyclical firms in the industry or across the economy, which typically serve the relatively higher-income groups, outperform or underperform non-cyclical firms following SI increases or decreases, respectively. The second study examines the SI implications for the stock market performance. An increase in SI indicates a rise in market return, reinforcing SI's predictive value for firms' performance dynamics. There is evidence that SI possesses superior informational value compared to changes in aggregate sentiment and conventional predictive variables. Due to the interrelated nature of these two studies, they are presented as a single chapter in this thesis. The last study examines the impact of Canadian governmental gender parity on the appointment of women to corporate boards. Trudeau's commitment to gender parity within the Canadian government exemplifies a national leader's effort to structurally transform women's leadership by setting a personal example. The paper shows that following Trudeau's gender parity initiative, Canadian firms saw a more significant increase in the proportion of women on their boards compared to their U.S. counterparts and the period before Trudeau's ascendance to leadership. Additionally, the increased presence of women on boards during this time not only correlated with but also appears to have causally contributed to a reduction in Canadian stock return volatility.