Executives in Politics
52 Pages Posted: 26 Nov 2017 Last revised: 7 Jun 2018
Date Written: May 14, 2018
Between 1980 and 2014, the share of politicians in federal office who held a corporate executive position prior to being elected increased from 13.5% to 21.2%, which we show was partly driven by intensifying global competition. Firms whose executives win federal elections experience significant positive stock returns around the dates of such elections and around the dates when Congress passes legislation introduced by their executives. Evidence from close elections shows that businessman politicians are more likely to vote for legislation supported by pro-business interest groups and less likely to vote for legislation supported by labor unions or consumer advocacy groups. 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: businessman politicians, executives, corporate political connections
JEL Classification: G32, G38, D72, G30
Suggested Citation: Suggested Citation