Aiken’s research studies whether politicians’ investments line up with their political beliefs

Adam Aiken, assistant professor of finance, partnered with research colleagues at N.C. State University and Heriot-Watt University to study the investments of members of the U.S. House and U.S. Senate from 2004 to 2012.

New research by a team that includes Assistant Professor Adam Aiken has found that investments by members of Congress typically reflect their political ideologies.

The paper “Do Politicians ‘Put Their Money Where Their Mouth Is?’: Ideology and Portfolio Choice” was co-authored by Aiken, a member of the Department of Finance faculty at Elon, Jesse Ellis of N.C. State University and Minjeong Kang of Heriot-Watt University and published in the journal Management Science.

​Their research found that generally speaking, the more liberal a politician’s voting record is, the more likely they are to invest in socially responsible stocks. Similarly, the less liberal a politician’s voting record is, the less likely they are to invest in socially responsible stocks.

Aiken explains that for their research, the team examined the voting records of members of Congress from 2004 to 2012 using the DW-NOMINATE database, which can assign an ideological score to a politician based upon how they voted on various pieces of legislation.

Those scores were then compared to publicly disclosed reports on the investments that members of Congress made during the same time period, with the MSCI KLD database used to assign companies a socially responsible score. The database bases its scores on a company’s approach to community relations, corporate governance, diversity, employee relations, the environment, human rights and product quality.

Aiken said the team found a clear correlation, particularly for politicians on either end of the political spectrum.

“We find that more liberal members of Congress, they do end up investing in what you would call more socially responsible firms and industries, less so on the conservative side,” Aiken said. “We find that moderate members, whether moderate Democrats or moderate Republicans – they tend to invest in a similar manner. The action, so to speak, is out there on the tails.”