Campaign Contributions from Corporate Executives in Lieu of Political Action Committees

Abstract

To distance themselves from the specter of special-interests, some Congressional candidates instituted personal bans on campaign contributions from corporate-linked political action committees (PACs). We leverage these to identify how corporate executives adapt their personal campaign contribution patterns in response to restrictions applied only to corporate-linked PACs but not to executives as individuals. In a newly constructed dataset, with 6,803,661 observations, that includes all CEO-firm-candidate contribution pairs for active S&P500 firms over an 18-year period, we find that corporate executives increase personal giving to specific candidates in lieu of their corporate-linked PACs in a form of cross-actor substitution among corporate-linked sources of campaign contributions. This finding has important implications for regulatory design in scenarios where cross-actor substitution is possible. Vis-à-vis campaign finance regulation, it suggests that bans on corporate-linked PAC contributions alone cannot prevent corporate-linked money from finding its way into candidates’ campaign coffers.

Keywords: Campaign Contributions, Regulation, Political Action Committees, Corporate Executives

JEL Classification: D72, L51