Business leaders are quick to abhor left-wing populism, with its government giveaways to supporters, spending on boondoggle projects, and disregard for financial discipline and investor confidence. They’re more likely to see right-wing populists as the “safe” variety, and can be conflicted about whether and how to oppose them. But new research shows that right-wing populism negatively affects stock returns — and the problem gets worse the longer populist leaders are in power. Executives need to take these risks seriously and learn how the rise of a right-wing populists affects credit and currency stability, talent acquisition and retention, investor confidence and asset flows — and the very ability to run and grow a business.
By 2020, Zoltan Varga’s media company was generating $66 million a year from nearly 45 titles — mostly women’s magazines and lifestyle brands. But he operated in Hungary, and doing business in the country was getting much more difficult. The government of prime minister Viktor Orbán had just blocked a potentially lucrative merger of his online business. Was it because one of his outlets was a political website? He had recently received two offers to buy the company, even though it was not for sale. He’d heard stories of other businesses getting squeezed via regulation, tax investigation, or forced sales to political insiders. Was this what he was experiencing? Would he, like other Hungarian businesspeople, end up quietly selling his company and leaving the country?
