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Wednesday, March 20, 2019

The Politics of CEOs

Cohen, Alma and Hazan, Moshe and Tallarita, Roberto and Weiss, David, The Politics of CEOs (March 19, 2019). Available at SSRN:

CEOs of public companies have influence over the political spending of their firms, which has been attracting significant attention since the Supreme Court decision in Citizens United. Furthermore, the policy views expressed by CEOs receive substantial consideration from policymakers and the public. Therefore, we argue, the political preferences of CEOs are important for a full understanding of U.S. policy making and politics. To contribute to this understanding, we provide novel empirical evidence on the partisan leanings of public-company CEOs.

We use Federal Election Commission (FEC) records to compile a comprehensive database of the political contributions made by more than 3,500 individuals who served as CEOs of S&P 1500 companies between 2000 and 2017. We find that these political contributions display substantial partisan preferences in support of Republican candidates. We identify how this pattern is related to the company’s industry, geographical region, and CEO gender. To highlight the significance of CEOs’ partisan preferences, we show that public companies led by Republican CEOs tend to be less transparent to investors with respect to their political spending. Finally, we conclude by discussing the important policy implications of our analysis.
In 2016, for instance, they gave $31.6 million to Republicans, and $9.6 million to Democrats.