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CEO political ideology and payout policy

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  • Bayat, Ali
  • Goergen, Marc

Abstract

This study investigates how CEO political ideology affects payout policy. Studying the CEOs of S&P 500 firms during 1997–2019 and measuring CEO political ideology by CEO political donations, we find that conservative CEOs are more likely to pay dividends and to make share repurchases, while also paying higher dividends. We find that conservative CEOs finance the higher dividends and share repurchases by utilizing the cash holdings and reducing capital and R&D expenditures. Nevertheless, CEO political ideology does not explain dividend cuts. This suggests that firms led by conservative CEOs exhibit levels of dividend flexibility comparable to those of firms led by other CEOs. Finally, we find that CEO conservatism has no effect on firm performance, firm value, R&D expenditure, and capital expenditure.

Suggested Citation

  • Bayat, Ali & Goergen, Marc, 2025. "CEO political ideology and payout policy," Journal of Banking & Finance, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:jbfina:v:172:y:2025:i:c:s0378426624002899
    DOI: 10.1016/j.jbankfin.2024.107375
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    More about this item

    Keywords

    CEO conservatism; CEO political ideology; Payout policy; Dividend policy; Share repurchases; Corporate governance;
    All these keywords.

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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