Proceedings of the 13th International Conference on Business, Accounting, Finance and Economics (BAFE 2025)

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CEO Political Ideology and Corporate Cash Holdings

Authors
Shirina Lin1, *, Dewan Rahman1, Barry Oliver1
1The University of Queensland, St Lucia, QLD, 4072, Australia
*Corresponding author. Email: s.hsinen@business.uq.edu.au
Corresponding Author
Shirina Lin
Available Online 28 December 2025.
DOI
10.2991/978-94-6463-968-1_27How to use a DOI?
Keywords
CEO Political Ideology; Corporate Cash Policy; Trade-Off Theory
Abstract

This study investigates the impact of CEO personal political ideology on the level of corporate cash holdings and the market value of the cash saved. Using individual CEO contribution data to US political parties covering the period 2003 to 2019, we find that CEO political ideology has a significant impact on firm corporate cash policy. Republican-leaning CEOs hold lower levels of cash in comparison to Democratic-leaning CEOs. This effect is more pronounced when the firms led by Republican-leaning CEOs have higher credit ratings. We also find that despite holding lower levels of cash, Republican-leaning CEOs’ conservative investment policies are valuable to shareholders. With every additional dollar of cash held, the value of cash for firms with Republican-leaning CEOs is $0.851 higher relative to Democratic-leaning CEOs. The effect is more pronounced when the firms are classified as efficient. These results suggest that Republican-leaning CEOs consider the level of cash in accordance with the trade-off theory; as the benefits of holding excess cash to mitigate costly external financing are outranked by the cost of piling unnecessary cash, leading to holding less cash. Moreover, their conservative investment policies are valuable to the market.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 13th International Conference on Business, Accounting, Finance and Economics (BAFE 2025)
Series
Advances in Economics, Business and Management Research
Publication Date
28 December 2025
ISBN
978-94-6463-968-1
ISSN
2352-5428
DOI
10.2991/978-94-6463-968-1_27How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Shirina Lin
AU  - Dewan Rahman
AU  - Barry Oliver
PY  - 2025
DA  - 2025/12/28
TI  - CEO Political Ideology and Corporate Cash Holdings
BT  - Proceedings of the 13th International Conference on Business, Accounting, Finance and Economics (BAFE 2025)
PB  - Atlantis Press
SP  - 381
EP  - 409
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-968-1_27
DO  - 10.2991/978-94-6463-968-1_27
ID  - Lin2025
ER  -