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Do CEOs affect employees' political choices?

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  • Ilona Babenko
  • Viktar Fedaseyeu
  • Song Zhang

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

Suggested Citation

  • Ilona Babenko & Viktar Fedaseyeu & Song Zhang, 2017. "Do CEOs affect employees' political choices?," BAFFI CAREFIN Working Papers 1750, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    • Handle: RePEc:baf:cbafwp:cbafwp1750
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    More about this item

    Keywords

    campaign contributions; elections; voting; CEOs; political activism; PACs; political candidates; voter turnout;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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