C-Suite and ESG: How Leadership Diversity Impacts Corporate Political Activity

• In Event: Corporate Politics in American Political Economy

Abstract

Though American corporations have recently been targeted by members of the Republican party for their involvement in environmental, social, and governance (ESG) activities, extant works in political science have neglected to explain what determines the extent to which corporations engage in these ventures. Going beyond the conventional explanations of risk management posed in the finance literature, I propose that increasing proportions of non-white and of women executive leaders in a company engender an increase in that company's ESG activity. Using data from Yahoo Finance, LinkedIn, corporate websites, and the Bloomberg Terminal, I find that the demographic composition of executive leadership affects ESG activity, but that race and gender have differential effects on each constituent activity. These findings shed light on the nature of corporate political activity, and potentially explain the admonishment of corporations by members of the American political right.

Authors

• Bradley H. Madsen, Texas A&M University

• Duncan Christensen, Texas A&M University