Island University Professor Unearths Political Influences of CEOs

| Published: January 25, 2017

Island University Professor Unearths Political Influences of CEOs

CORPUS CHRISTI, Texas – In an effort to better inform the public on an understudied research topic, Dr. Andrew Johnson, Assistant Professor of Management in the College of Business at Texas A&M University-Corpus Christi, has collaborated with Dr. Bruce C. Rudy, Assistant Professor of Management at The University of Texas at San Antonio, on a project that examines CEO characteristics and how they affect Corporate Political Activity (CPA).

Diving into demographic characteristics, Johnson took into account CEO age, tenure, functional and educational background to determine a CEO’s willingness to invest in CPA. Johnson and Rudy also considered the type of lobbying, either in-house or contract lobbying, most likely to be used by certain CEOs. Johnson who is already working on new research has noticed a trend in how lobbying can become a valuable asset to corporations.

“With the financial crisis of 2008, we had serval companies that were bailed out by the government,” said Johnson. “Looking at a comparison of AIG and Lehman Brothers, AIG was bailed out due to the effect political activity has in lobbying and building networks, they continued the investment trend upwards. Compared to less political companies like Lehman Brothers who declined their investments and where not spared nor their agendas heard out in an attempt for policy makers to help them.”

Since 2011, Johnson has worked to collect data from the largest 100 corporations as identified by Fortune Magazine in 1980, relying heavily on publicly available data at no cost as the study was done without any financial assistance. The data collected spans 27 years, and includes publicly-traded firms such as the 3M Manufacturing Company and the Xerox Corporation, capturing any change in a firm’s CEO as the firms mature.

“The experiences of a CEO as an individual impacts the companies they lead,” said Johnson. “We often underestimate the effect of the external and political environment on corporate decisions and ultimately how well companies perform. CEOs of large companies are very politically active and tend to develop strong ties with government officials. By not participating in the political environment, a CEO could place their company at a disadvantage.”

Although CEOs contribute to the financial success or failure of an organization, they also contribute to stock market prices and the economic standing of this country for business owners and citizens alike. Johnson believes that Island University students could also benefit from understanding the relationship between business and politics.  

“Educated people are the lifeblood of a democracy,” said Johnson. “In a democracy, it is essential to engage in the system and to advocate positions to the government. For graduates of the Island University, having an understanding that politics are going to play a role in so many aspects of their lives, particularly in business, is a vital part of their education.”

Johnson and Rudy hope to continue their series of research projects. Adding to their current data collection, Johnson plans to study the return on investment of CPA for large companies.