Executives in Politics

55 Pages Posted: 26 Nov 2017 Last revised: 16 Sep 2020

See all articles by Ilona Babenko

Ilona Babenko

Arizona State University

Viktar Fedaseyeu

China Europe International Business School (CEIBS)

Song Zhang

Boston College - Department of Finance

Date Written: September 14, 2020


We document that the share of corporate executives in federal elected office increased from 13.3% in 1980 to 22.6% in 2018 and find evidence consistent with executives entering politics to advance their firms’ interests. First, firms make substantial political contributions to their former executives. Second, executives’ electoral wins and legislation passage are associated with positive stock returns for their firms. Third, executives are more likely to join congressional committees overseeing their firms’ industries. Fourth, executives accumulate a pro-business voting record. Finally, executives are more likely to seek political office when their industries are hit by competitive shocks. Overall, our results indicate that corporate executives have increased their direct involvement in the legislative process in the United States and that this involvement may have generated substantial benefits for their firms.

Keywords: business politicians, executives, regulation, corporate political connections

JEL Classification: G32, G38, D72, G30

Suggested Citation

Babenko, Ilona and Fedaseyeu, Viktar and Zhang, Song, Executives in Politics (September 14, 2020). BAFFI CAREFIN Centre Research Paper No. 2017-62, Finance Down Under 2019 Building on the Best from the Cellars of Finance, Available at SSRN: https://ssrn.com/abstract=3075177 or http://dx.doi.org/10.2139/ssrn.3075177

Ilona Babenko

Arizona State University ( email )

Department of Finance
W.P. Carey School of Business
Tempe, AZ 85287
United States

Viktar Fedaseyeu (Contact Author)

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206

HOME PAGE: http://https://www.ceibs.edu/fviktar

Song Zhang

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

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