Ilona Babenko is Associate Professor at Arizona State University W.P. Carey School of Business; Viktar Fedaseyeu is Assistant Professor in the Department of Finance at Bocconi University; and Song Zhang is a PhD student in Finance at Boston College. This post is based on their recent paper.
Over the last two decades, the share of corporate executives holding political office in the United States increased substantially, which resulted in large benefits for their firms and shifted the balance of power toward corporate interests
On November 8, 2016 Donald Trump won the U.S. Presidency. While his election was unusual in many respects, Trump is just one of several recent examples of corporate executives running for political office. William Harrison Binnie, a former CEO of Carlisle Plastics, Inc., unsuccessfully ran for the U.S. Senate in 2010. In 2000, Jon Corzine, a former CEO of Goldman Sachs, was elected U.S. Senator, and in 2005 became the governor of New Jersey. These examples are far from isolated. In fact, the share of federal office holders (i.e., U.S. Congressmen, Senators, and Presidents/Vice-Presidents) who had executive experience prior to being elected remained relatively flat at around 13-14% between 1980 and 2000 but then increased rather sharply to more than 21% by 2014. Why do so many executives make the switch from a career in business and run for political office? Further, how does the increase in executives’ political participation affect their firms and the legislative agenda in the United States more generally? In a new working paper, we investigate these questions by studying the incidence of corporate executives running in U.S. federal elections between 1980 and 2014.