Executive Compensation and Executive Contributions to Corporate Pacs

Posted: 3 Aug 2001

See all articles by Kathleen A. Farrell

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

Department of Finance; University of Georgia Law School

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Abstract

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, J33

Suggested Citation

Farrell, Kathleen A. and Hersch, Philip L. and Netter, Jeffry M., Executive Compensation and Executive Contributions to Corporate Pacs. Available at SSRN: https://ssrn.com/abstract=274529

Kathleen A. Farrell

University of Nebraska-Lincoln ( email )

730 N. 14th Street
301 Hawks Hall
Lincoln, NE 68588-0405
United States
402-472-9500 (Phone)
402-472-5140 (Fax)

Philip L. Hersch

Wichita State University - W. Frank Barton School of Business - Department of Economics ( email )

Wichita, KS 67260-0078
United States
(316) 978-7096 (Phone)
(316) 978-3308 (Fax)

Jeffry M. Netter (Contact Author)

Department of Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

HOME PAGE: http://www.terry.uga.edu/directory/profile/jnetter/

University of Georgia Law School

225 Herty Drive
Athens, GA 30602
United States

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