The working paper by Viktar Fedaseyeu and co-authors was published in The Review of Financial Studies

The working paper "Do CEOs Affect Employees’ Political Choices?" by Ilona Babenko (W. P. Carey School of Business, Arizona State University), Viktar Fedaseyeu (Bocconi University and Belarusian Economic Research and Outreach Center) and Song Zhang (Carroll School of Management, Boston College) was published in The Review of Financial Studies.

ABSTRACTThe Review of Financial Studies

We study the relation between CEO and employee campaign contributions and find that CEO-supported political candidates receive 3 times more money from employees than candidates not supported by the CEO. This relation holds around CEO departures, including plausibly exogenous departures due to retirement or death. Equity returns are significantly higher when CEO-supported candidates win elections than when employee-supported candidates win, suggesting that CEOs’ campaign contributions are more aligned with the interests of shareholders than are employee contributions. Finally, employees whose donations are misaligned with their CEOs’ political preferences are more likely to leave their employer.