Although the appointment of politicians to corporate boards is a highly prevalent corporate political strategy, empirical evidence remains inconclusive as to whether and how such appointments create value for firms and their shareholders. Drawing on the director role literature, we argue that politician-directors are likely to serve as valuable resource providers but are less likely to serve as guardians of shareholder interests. In light of this trade-off, investors will infer the expected value of politician appointments on the basis of the director role that they perceive as most needed by a particular firm within the specific institutional context in which it is embedded. We test our predictions using an extensive data set of 345 separate appointment events across 14 countries over a period of 10 years. Our findings show that politician appointments are associated with both resource-provisionary benefits and governance-based costs but that the perceived level of corruption in a country critically conditions both. Specifically, perceived corruption can be seen to function as a double-edged sword that increases both the expected benefits and the expected costs of politician appointments.

Although interim regimes in former autocracies are generally tasked with initiating a democratic ‘new normal’, they may privately intend to become their country’s new autocratic rulers. We argue that, to cope with the uncertainty stemming from this possibility, investors infer an interim regime’s intentions from the dominance displayed by the regime during government‐related violence, as reflected in the share of civilian fatalities. Specifically, we propose that investors interpret higher interim‐regime dominance as a signal of weaker democratic intentions and associate such weaker intentions with a gloomier political outlook for local firms. We therefore hypothesize that investors react more negatively to violent events characterized by higher interim‐regime dominance. We also hypothesize a less negative effect of such dominance for firms with larger foreign footprints, lower indebtedness, or more concentrated ownership, since investors will likely consider such firms more resilient to political deterioration. Applying event study methodology to 94 spells of violence in Egypt during the Arab Spring, we find substantial support for our hypotheses, thus contributing to management research on investor decision‐making, violence, and political uncertainty.

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