Executives in Politics

Abstract

We study the involvement of corporate executives in U.S. politics over the last forty years. First, we document that the share of business politicians in federal elected office increased from 13.3% in 1980 to 22.6% in 2018, with most of the increase occurring over the last two decades. Second, we find that business politicians enjoy an early fundraising advantage over their opponents, both because they are more likely to self-fund their campaigns and because they receive more campaign contributions from their firms. Third, the election of business politicians benefits their firms and industries, which experience positive abnormal stock returns when their executives win political office. We also find that business politicians, once elected, accumulate a voting record that shifts the balance of power toward corporate interests. Overall, our results indicate that corporate executives have become more involved in U.S. politics and that this involvement has benefited their firms and industries and affected aggregate legislative outcomes.