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Who, republican or democrat CEOs, laughs last? Political cycles in the market for corporate directors

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  • Ahn, Seong Jin
  • Lee, Changmin

Abstract

This paper examines the relationship between CEOs' political preferences and their post-retirement directorship opportunities, proposing that political donations may serve as signals of political influence or connections that impact career prospects in the market for corporate directors. Using data on political contributions from 1998 to 2016, we explore whether CEOs' political affiliations create a cyclical pattern in the professional labor market, favoring those aligned with the ruling party. Our analysis reveals that Republican partisan CEOs are more successful in securing directorships under Republican regimes (George Walker Bush, 2003∼2008), while the reverse holds under Democratic regimes (Barack Hussein Obama, Jr. 2009∼2014). These results remain robust after addressing potential endogeneity using presidential election outcomes as an instrumental variable.

Suggested Citation

  • Ahn, Seong Jin & Lee, Changmin, 2025. "Who, republican or democrat CEOs, laughs last? Political cycles in the market for corporate directors," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014570
    DOI: 10.1016/j.frl.2024.106428
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    More about this item

    Keywords

    Political preference; Political connections; Boards of director; Corporate Governance; CEO;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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