Review of Financial Studies Vol. 33 No. 4 2020

Do CEOs Affect Employees’ Political Choices?

Ilona Babenko¹; Viktar Fedaseyeu²; Song Zhang³

¹ W. P. Carey School of Business, Arizona State University · ² Bocconi University and Belarusian Economic Research and Outreach Center (BEROC) · ³ Carroll School of Management, Boston College

Abstract

We study the relation between CEO and employee campaign contributions and find that CEO-supported political candidates receive 3 times more money from employees than candidates not supported by the CEO. This relation holds around CEO departures, including plausibly exogenous departures due to retirement or death. Equity returns are significantly higher when CEO-supported candidates win elections than when employee-supported candidates win, suggesting that CEOs’ campaign contributions are more aligned with the interests of shareholders than are employee contributions. Finally, employees whose donations are misaligned with their CEOs’ political preferences are more likely to leave their employer.

DOI

10.1093/rfs/hhz080

Volume

33

Issue

4

Pages

1781-1817

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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