Politically Extreme CEOs and Corporate Misconduct

Organization’s misconduct harm their organizations, society and environment alike. Prior research have proposed agentic and trait-based explanations on why executives engage in misconduct. However, misconduct is essentially a moral failure, where personal values underlie engagement in misconduct. These values are often embodied in one’s political ideology—defined as the sets of beliefs about the proper order of society and how it can be achieved. Drawing on recent research on political ideologies and social identity theory, we hypothesize that CEOs with extreme political ideologies- extreme conservatives and extreme liberals- are more likely to engage in misconduct than CEOs with politically moderate ideologies; and this effect is accentuated when the organizational and state ideology echo the CEO’s views. We find strong evidence for our hypotheses in a sample of Fortune 500 CEOs in the period 2010-2018 by taking advantage of variation imposed by CEO turnover.