The Politics of CEOs

CEOs of U.S. public companies have significant influence over policy and political decisions. They are commonly regarded as authoritative experts on policy matters, they are routinely appointed to advisory committees by Republican and Democratic presidents, and they publicly express their policy views on a number of topics, from economic and fiscal policy, to LGBT rights, environmental issues, immigration, or education. Their most prominent association, the Business Roundtable, has the explicit purpose of formulating and advocating policy views, and it has been doing so successfully since the 1970s. Finally, CEOs are the key decision makers within their company and can therefore influence how much money and in favor of which candidates the corporation donates. Especially after the Supreme Court’s decision in Citizens United, which allowed corporations to make unlimited independent political expenditures, corporate spending can substantially affect elections and policymaking.

Therefore, understanding the political preferences of CEOs, we argue, is valuable for understanding the inner dynamics of U.S. policymaking and politics.

Our paper tries to contribute to this understanding with an empirical study of the political preferences of public-company CEOs during the 18-year period from 2000 to 2017. Our study examines more than 3,800 individuals who served as CEOs of S&P 1500 companies.

We find that, during the period we examine, CEOs donate disproportionately more to the Republican Party and its candidates. We classify CEOs as “Republican” if they contribute at least two-thirds of their donations to Republican candidates, “Democratic” if they contribute at least two-thirds of their donations to Democratic candidates, and “Neutral” if they split their financial support among the two major parties. We find that, according to these definitions, more than 57% of CEOs are Republicans, 19% are Democrats, and the rest are Neutral. Therefore, Republican CEOs are more than three times as many as Democratic CEOs. Furthermore, Republican CEOs lead companies with almost twice the asset value of companies led by Democratic CEOs.

CEOs’ preference for Republican candidates is predominant across industries, geographical regions, and CEO gender. There are differences, however. In some industries (energy, manufacturing, and chemicals) and regions (Midwest and South), the Republican tilt is more pronounced than in others. Furthermore, female CEOs are much more likely to donate to Democratic candidates than their male counterparts.

Finally, to explore whether CEO political preferences can affect corporate decisions (at least when they have a political dimension), we study the relationship between CEOs’ partisan leanings and the quality of corporate disclosure about political spending. We find that companies with Republican CEOs are less willing to make their political spending transparent to investors than companies with Democratic CEOs.