Abstract
By relying on upper echelons theory and agency theory, this study explores how CEO characteristics impact firms’ engagement in corporate political strategy (CPS). The current study proposes that depending on their CEOs’ tenure, firms have different interests and incentives to make CPS investments. In addition, this study suggests that CEOs’ personal involvement in political activity affects their firms’ CPS investments. CEOs’ personal involvement in political activity could indicate agency problems between shareholders and CEOs. To explore this agency problem further, this study also examines how CEO duality moderates the relationship between CEO characteristics and CPS. This study uses a sample of 416 pharmaceutical firms in the U.S. from the year 2000 – 2010. The results show that CEO tenure positively affects CPS. Furthermore, CEOs’ personal involvement in political activity also positively influences CPS. The results also reveal that CEO duality weakens the relationship between CEO tenure and CPS.
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