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Do CEOs affect employees' political choices?

Ilona Babenko, Viktar Fedaseyeu and Song Zhang

No 1750, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: We analyze whether CEOs influence their employees’ political choices whether this influence has implications for firm value. We find that employees donate three times more money to CEO-supported political candidates than to other candidates. This relation also 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. Further, CEO influence is strongest in firms with the largest potential benefits from political participation and firms that explicitly advocate for political candidates. Our results suggest that CEOs are a political force that benefits shareholders

Keywords: campaign contributions; elections; voting; CEOs; political activism; PACs; political candidates; voter turnout (search for similar items in EconPapers)
JEL-codes: D72 P48 G30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cdm, nep-hrm and nep-pol
Date: 2017
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