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Campaign Contributions over CEOs’ Careers

Author

Listed:
  • Adam R. Fremeth

    (Richard Ivey School of Business, University of Western Ontario, London, ON)

  • Brian Kelleher Richter

    (Richard Ivey School of Business, University of Western Ontario)

  • Brandon Schaufele

    (Department of Economics, University of Ottawa, Ottawa, ON)

Abstract
Individuals dominate money in politics, accounting for over 90% of campaign contributions, but studies of individuals’ giving are scarce. We show that individuals increase their personal contributions dramatically when they assume leadership roles at organizations such as labor unions, non-profits, and firms. Using a newly constructed dataset that focuses on personal contributions, we exploit variation in the leadership status of all 2,198 individuals who were S&P 500 CEOs at any point between 1991 and 2008 to identify a $4,000 jump in personal political giving when individuals become CEOs. Despite giving more money to more candidates, more political action committees (PACs), and more parties, active CEOs’ partisan orientations remain largely unchanged. Falsification tests of an underlying identification assumption demonstrate that these patterns hold whether an individual is promoted to CEO internally or appointed externally. While some fraction of CEOs’ contributions can be attributed to long-standing preferences, willingness, and ability to contribute, the striking change in behavior we identify cannot be explained by these factors alone.

Suggested Citation

  • Adam R. Fremeth & Brian Kelleher Richter & Brandon Schaufele, 2012. "Campaign Contributions over CEOs’ Careers," Working Papers 1203E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:1203e
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    References listed on IDEAS

    as
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    Cited by:

    1. Hazan, Moshe & Cohen, Alma & Weiss, David, 2021. "Politics and Gender in the Executive Suite," CEPR Discussion Papers 14513, C.E.P.R. Discussion Papers.
    2. Scott Callahan, 2018. "Farmer Campaign Finance: Determinants of Contibutions to Political Action Committees," Working Papers 18-12, Department of Economics, Appalachian State University.
    3. Matter, Ulrich & Roberti, Paolo & Slotwinski, Michaela, 2019. "Vote buying in the US Congress," ZEW Discussion Papers 19-052, ZEW - Leibniz Centre for European Economic Research.
    4. Marianne Bertrand & Matilde Bombardini & Raymond Fisman & Francesco Trebbi, 2020. "Tax-Exempt Lobbying: Corporate Philanthropy as a Tool for Political Influence," American Economic Review, American Economic Association, vol. 110(7), pages 2065-2102, July.
    5. Özgür, Arslan-Ayaydin & Thewissen, James & Torsin, Wouter, 2021. "Earnings Management Methods and CEO Political Affiliation," LIDAM Discussion Papers LFIN 2021017, Université catholique de Louvain, Louvain Finance (LFIN).
    6. Callahan, Scott, 2018. "Farmer Campaign Finance: Determinants of Contributions to Political Action Committees," 2018 Annual Meeting, August 5-7, Washington, D.C. 273868, Agricultural and Applied Economics Association.
    7. Scott Callahan, 2018. "Do Campaign Contributions from Farmers Influence Agricultural Policy? Evidence From a 2008 Farm Bill Amendment Vote to Curtail Cotton Subsidies," Working Papers 18-08, Department of Economics, Appalachian State University.
    8. Adam Fremeth & Brian Kelleher Richter & Brandon Schaufele, 2013. "Campaign Contributions over CEOs' Careers," American Economic Journal: Applied Economics, American Economic Association, vol. 5(3), pages 170-188, July.
    9. Adam Fremeth & Brian Kelleher Richter & Brandon Schaufele, 2018. "Spillovers from regulating corporate campaign contributions," Journal of Regulatory Economics, Springer, vol. 54(3), pages 244-265, December.
    10. Adam R. Fremeth & Guy L. F. Holburn & Richard G. Vanden Bergh, 2016. "Corporate Political Strategy in Contested Regulatory Environments," Strategy Science, INFORMS, vol. 1(4), pages 272-284, December.
    11. Niebler, Sarah & Urban, Carly, 2017. "Does negative advertising affect giving behavior? Evidence from campaign contributions," Journal of Public Economics, Elsevier, vol. 146(C), pages 15-26.
    12. Christian Cox, 2020. "Campaign Contributions by Non‐profit Executives and Government Grants," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(4), pages 916-933, August.
    13. Bunkanwanicha, Pramuan & Di Giuli, Alberta & Salvade, Federica, 2022. "Bank CEO careers after bailouts: The effects of management turnover on bank risk," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    14. 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.
    15. James Rockey & Nadia Zakir, 2021. "Power and the money, money and the power: A network analysis of donations from American corporate to political leaders," Discussion Papers 21-03, Department of Economics, University of Birmingham.
    16. Timothy Werner, 2015. "Gaining Access by Doing Good: The Effect of Sociopolitical Reputation on Firm Participation in Public Policy Making," Management Science, INFORMS, vol. 61(8), pages 1989-2011, August.
    17. Artés, Joaquín & Richter, Brian Kelleher & Timmons, Jeffrey F., 2019. "The Value of Political Geography: Evidence from the Redistricting of Firms," Working Papers 291, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.

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    More about this item

    Keywords

    Campaign Contributions; CEOs; Leaders; Personnel Economics; PACs;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H89 - Public Economics - - Miscellaneous Issues - - - Other
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • M59 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Other

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