ANALYSIS OF THE EFFECT OF CEO POLITICAL IDEOLOGY ON CORPORATE SUSTAINABILITY AND OTHER EXTRA-FINANCIAL APPROACHES

Open Access
Author:
Cavanaugh, Daniel Liam
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • John Andrew Fulton, Thesis Supervisor
  • Brian Spangler Davis, Honors Advisor
Keywords:
  • Politics
  • Sustainability
  • Governance
  • ESG
  • CSR
  • Finance
Abstract:
This research hypothesizes that CEO political ideology will have an impact on corporate sustainability and other aspects of extra-financial corporate decision-making. In particular, CEOs higher on liberalism will on average have companies that more highly embrace the environment than companies with more conservative executives. This paper proposes that differences in political orientation will affect corporate sustainability against all companies in the sample, against a company’s historical performance, and against industry peers. It also measures whether ideology influences standing with sustainability investors. This thesis analyzes metrics that also include social and governance-related aspects in addition to sustainability and postulates that organizations with more liberal CEOs are more transparent in their disclosure of extra-financial performance. To test these theories, it draws political donor information on CEOs from the top 187 organizations in the Fortune 500 to establish political orientation on a scale from 0 to 1, 0 being completely conservative and 1 being completely liberal.