Political Affiliation and Pay Slice: Do Blue CEOs Accept Less Green?
Borghesi, Richard and Kiyoung Chang, 2018. Political Affiliation and Pay Slice: Do Blue CEOs Accept Less Green?, International Review of Finance18(3), 452-461.
13 Pages Posted: 10 Nov 2016 Last revised: 10 Mar 2019
Date Written: November 10, 2016
We examine the relationship between CEO political alignment, compensation, and pay disparity (relative to other high-earning executives) and find that Democratic CEOs accept less pay and a significantly lower pay slice. That is, left-leaning CEOs put their money where their mouth is regarding the Democratic ideology of economic and social equity. This smaller pay gap is not a function of variations in managerial ability; if anything Democratic CEOs are more talented than Republican CEOs. Results suggest that Democratic CEOs may be more effective at running firms in which collaboration among top executives is more valuable than are the potential gains from tournament incentives.
Keywords: Political Ideology, Political Contributions, Executive Compensation, Pay Disparity
JEL Classification: G34, J31, M12
Suggested Citation: Suggested Citation