Executives in Politics

Ilona Babenko (), Viktar Fedaseyeu () and Song Zhang ()
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Ilona Babenko: W.P. Carey School of Business, Arizona State University, Tempe, Arizona 85287
Viktar Fedaseyeu: China Europe International Business School (CEIBS), Shanghai 201206, China
Song Zhang: Lerner College of Business and Economics, University of Delaware, Newark, Delaware 19716

Management Science, 2023, vol. 69, issue 10, 6251-6270

Abstract: We study the involvement of corporate executives in U.S. politics over the last 40 years. First, we document that the share of business politicians in federal elected office increased from 13.3% in 1980% to 22.6% in 2018, with most of the increase occurring over the last two decades. Second, we find that business politicians enjoy an early fundraising advantage over their opponents, both because they are more likely to self-fund their campaigns and because they receive more campaign contributions from their firms. Third, the election of business politicians benefits their industries and firms, which experience positive abnormal stock returns when their executives win political office. We also show that business politicians, once elected, vote for policies that shift the balance of power toward corporate interests. Using close elections for identification, we show that this policy shift cannot be attributed solely to the changes in the underlying preferences of the electorate. Overall, our results indicate that corporate executives have become more involved in U.S. politics and that this involvement has benefited business interests and affected aggregate legislative outcomes.

Keywords: business politicians; executives; campaign finance; corporate political connections (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:10:p:6251-6270

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