Executive Compensation and Executive Contributions to Corporate PACs
Kathleen A. Farrell
University of Nebraska-Lincoln
Philip L. Hersch
Wichita State University - W. Frank Barton School of Business - Department of Economics
Jeffry M. Netter
University of Georgia - Department of Banking and Finance; University of Georgia Law School
Advances in Financial Economics, Vol. 6, 2001
This paper estimates the determinants of the contributions made by top executives to their firm's Political Action Committee (PAC). We find that executive's personal PAC contributions (proxy for the interest of the firm) are positively related to their shareholdings, income and option holdings (proxies for the interests of the executive). Contributions are also higher for CEOs and board members. This is direct evidence that the structure of the contracts between the firm and management, especially compensation, aligns manager's personal behavior with the interests of the firm.
Keywords: Executive compensation, political contribution
JEL Classification: D72, G34, J33Accepted Paper Series
Date posted: August 3, 2001
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