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.

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Do CEOs affect political choices of their employees? Using a large sample of U.S. firms, we find evidence that they do. First, we document that employees donate significantly more money to CEO-supported political candidates than to otherwise similar candidates not supported by the CEO. In 2012, for example, Barack Obama raised three times more money from employees of firms whose CEOs donated to him than from employees of firms whose CEOs donated to Mitt Romney (see Figure). We find similar effects for all federal elections (House, Senate, and President). Second, we find that employees located in congressional districts where CEOs support political candidates are more likely to vote in elections, suggesting that CEOs can affect not only their employees’ campaign contributions but also voter turnout.

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