CEO Political Ideology, Shareholder Primacy and Dividend Policy

55 Pages Posted: 21 Jan 2020 Last revised: 11 Aug 2020

See all articles by Ali Bayat

Ali Bayat

University of Aberdeen

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Date Written: January 20, 2020


We argue that CEOs have different attitudes toward the firm’s stakeholders and that these differences in attitudes affect the firm’s decision making. We hypothesize that these differences stem from differences in political ideology: Liberal CEOs, as compared to their conservative counterparts, pay less attention to shareholders and this is reflected in dividend policy. To test the validity of our hypothesis, we measure CEO ideology by political donations. We study the CEOs of S&P 500 firms during 1997-2014 and find that firms with liberal CEOs are less likely to pay dividends and have significantly lower dividend payouts. In contrast, conservative CEOs pay more dividends, even if this requires redundancies.

Keywords: CEO Political Ideology, Dividend Policy, Stakeholder Theory, Corporate Governance

JEL Classification: G35, G34

Suggested Citation

Bayat, Ali and Goergen, Marc, CEO Political Ideology, Shareholder Primacy and Dividend Policy (January 20, 2020). European Corporate Governance Institute – Finance Working Paper No. 650/2020, Available at SSRN: or

Ali Bayat

University of Aberdeen ( email )

King's College
Aberdeen, AB24 3FX
United Kingdom

HOME PAGE: http://

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006


European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels


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