Prosocial CEOs and Social Advocacy : Evidence from Firm Political Donations

Prosocial CEOs advocate for social issues through supporting politicians representing their social values. We focus on two types of social issues: racial inequality and gun violence. Using personal charitable donation behavior to identify prosocial CEOs, we find that firms with prosocial CEOs donate more to Black politicians and politicians supporting gun control. The effect presents in both the Republican-leaning and Democratic-leaning CEO samples and is stronger when firms have a higher social performance score, CEOs that are more powerful, and more analysts following them. We address endogeneity issues by an instrumental variable approach and a difference-in-differences setting that exploits exogenous CEO turnovers. Furthermore, we document that the capital market values the presence of prosocial CEOs