Book contents
- Corporate Political Responsibility
- Reviews
- Corporate Political Responsibility
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Preface
- Section I Foundations of Corporate Political Responsibility: Metrics for Disclosure and Good Governance
- Section II Transparency: Causes and Consequences
- 4 What Drives Firms to Disclose Their Political Activity?
- 5 Promise and Peril
- Section III Accountability: Linking Corporate Social Responsibility, Employee Relations, and Corporate Political Responsibility
- Section IV Responsibility: Corporate Political Responsibility and Climate
- Section V Implementing Corporate Political Responsibility: Opportunities and Challenges
- Index
- References
5 - Promise and Peril
Lessons from Shareholder Reactions to Corporate Political Activity Disclosure
from Section II - Transparency: Causes and Consequences
Published online by Cambridge University Press: 16 November 2023
Edited by
Book contents
- Corporate Political Responsibility
- Reviews
- Corporate Political Responsibility
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Preface
- Section I Foundations of Corporate Political Responsibility: Metrics for Disclosure and Good Governance
- Section II Transparency: Causes and Consequences
- 4 What Drives Firms to Disclose Their Political Activity?
- 5 Promise and Peril
- Section III Accountability: Linking Corporate Social Responsibility, Employee Relations, and Corporate Political Responsibility
- Section IV Responsibility: Corporate Political Responsibility and Climate
- Section V Implementing Corporate Political Responsibility: Opportunities and Challenges
- Index
- References
Summary
This chapter examines the role of disclosure as a tool for promoting corporate political accountability by reviewing how shareholders reacted to various events in the United States and abroad that either changed the ability of firms to engage in the political process or revealed previously hidden corporate political activity. The conclusions drawn from this summary are mixed, with investors’ reactions contingent on myriad factors, including the form of the political activity engaged in, prior contestation over such activity by shareholders, and other firm-level nonmarket and market dynamics. The chapter concludes by discussing the limits of disclosure as a tool for regulating corporate political activity, as well as public policy more broadly, and advocates for broader, institutional reforms regarding the role of money in politics.
Keywords
- Type
- Chapter
- Information
- Corporate Political Responsibility , pp. 124 - 154Publisher: Cambridge University PressPrint publication year: 2023
References
Acemoglu, D., Johnson, S., Kermani, A., Kwak, J. & Mitton, T. (2013). The Value of Political Connections in Turbulent Times: Evidence from the United States. National Bureau of Economic Research, Working Paper 19701.Google Scholar
Akey, P. (2015). Valuing Changes in Political Networks: Evidence from Campaign Contributions to Close Congressional Elections. Review of Financial Studies, 28(11), 3188–223.Google Scholar
Ansolabehere, S., de Figueiredo, J. M. & Snyder, Jr., J. M. (2003). Why Is There So Little Money in U.S. Politics? Journal of Economic Perspectives, 17(1), 105–30.CrossRefGoogle Scholar
Ansolabehere, S., Snyder, J. M. & Ueda, M. (2004). Did Firms Profit from Soft Money? Election Law Journal, 5(2), 193–98.Google Scholar
Arnold, R. D. (1990). The Logic of Congressional Action. New Haven, CT: Yale University Press.Google Scholar
Bebchuk, L. & Jackson, R. (2010). Corporate Political Speech: Who Decides? Harvard Law Review, 124, 83–117.Google Scholar
Bebchuk, L. & Jackson, R. (2013). Shining Light on Corporate Political Spending. Georgetown Law Journal, 101, 923–67.Google Scholar
Briffault, R. (2010). Campaign Finance Disclosure 2.0. Election Law Journal, 9(4), 273–303.Google Scholar
Brown, S. & Warner, J. (1980). Measuring Security Price Performance. Journal of Financial Economics, 8(3), 205–58.CrossRefGoogle Scholar
Buchanan, J. M. & Tullock, G. (1962). The Calculus of Consent. Ann Arbor, MI: University of Michigan Press.Google Scholar
Burbano, V. C. (2021). The Demotivating Effects of Communicating a Social-Political Stance: Field Experimental Evidence from an Online Labor Market Platform. Management Science, 67(2), 1004–25.Google Scholar
Burns, N. & Jindra, J. (2014). Political Spending and Shareholder Wealth: The Effect of the U.S. Supreme Court Ruling in Citizens United. American Politics Research, 42(4), 579–99.Google Scholar
Coates, IV, J. C. (2012). Corporate Politics, Governance, and Value before and after Citizens United. Journal of Empirical Legal Studies, 9(4), 657–96.Google Scholar
Dalley, P. J. (2007). The Use and Misuse of Disclosure as a Regulatory System. Florida State University Law Review, 34(4), 1089–131.Google Scholar
Darnell, S. & McDonnell, M-H. (2023). License to Give: The Relationship between Organizational Reputation and Stakeholders’ Support for Corporate Political Activity. In Lyon, T., ed., Corporate Political Responsibility. Cambridge, UK: Cambridge University Press.Google Scholar
DeBoskey, D.G. & Luo, Y. (2018). Recent Trends in Corporate Political Disclosure for a Sample of S&P 500 Firms: A New and Emerging Corporate Disclosure Area. International Journal of Disclosure and Governance, 15(1), 176–84.CrossRefGoogle Scholar
Delmas, M. & Lyon, T. (2018). When Corporations Take Credit for Green Deeds Their Lobbying May Tell Another Story. The Conversation, July 17.Google Scholar
Den Hartog, C. & Monroe, N. (2008). The Value of Majority Status: The Effect Jeffords’s Switch on Asset Prices of Republican and Democratic Firms. Legislative Studies Quarterly, 33(1), 63–84.CrossRefGoogle Scholar
Eckhouse, B., Chediak, M., Provance, J. & Henry, T. (2021). Angry Shareholders Pile into Lawsuits That Could Cost FirstEnergy Millions of Dollars. Associated Press, January 1.Google Scholar
Fama, E. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work. Journal of Finance, 25(2), 383–417.Google Scholar
Ferguson, T. & Voth, H-J. (2008). Betting on Hitler: The Value of Political Connections in Nazi Germany. Quarterly Journal of Economics, 123(1), 101–37.Google Scholar
Fisher, J. (2001). The Political Parties, Elections and Referendums Act of 2000. Representation, 38(1), 11–19.Google Scholar
Fisman, R. (2001). Estimating the Value of Political Connections. American Economic Review, 91(4), 1095–102.Google Scholar
Fowler, A., Garro, H. & Spenkuch, J. L. (2020). Quid Pro Quo? Corporate Returns to Campaign Contributions. Journal of Politics, 82(3), 844–58.Google Scholar
Freed, B., Sandstrom, K., & Laufer, W. S. (2023). Targeting Private Sector Influence in Politics: Corporate Accountability as a Risk and Governance Problem. In Lyon, T., ed., Corporate Political Responsibility. Cambridge, UK: Cambridge University Press.Google Scholar
Gilbert, M. D. (2013). Campaign Finance Disclosure and the Information Tradeoff. Iowa Law Review, 1847–94.Google Scholar
Goh, L., Liu, X. & Tsang, A. (2020). Voluntary Disclosure of Corporate Political Spending. Journal of Corporate Finance, 61, Article 101403.CrossRefGoogle Scholar
Hadani, M. & Schuler, D. A. (2013). In Search of El Dorado: The Elusive Financial Returns on Corporate Political Investments. Strategic Management Journal, 34(2), 165–81.Google Scholar
Hall, R. L. & Deardorff, A. V. (2006). Lobbying as Legislative Subsidy. American Political Science Review, 100(1), 69–84.Google Scholar
Hart, O. & Zingales, L. (2017). Companies Should Maximize Shareholder Welfare Not Market Value. Journal of Law, Finance, and Accounting, 2(2), 247–74.Google Scholar
Healy, P. M. & Palepu, K. G. (2001). Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of the Empirical Disclosure Literature. Journal of Accounting and Economics, 31(1–3), 405–40.Google Scholar
Hertel-Fernandez, A. (2014). Who Passes Business’s “Model Bills”? Policy Capacity and Corporate Influence in US State Politics. Perspectives on Politics, 12(3), 582–602.Google Scholar
Issacharoff, S. & Karlan, P. S. (1999). The Hydraulics of Campaign Finance Reform. Texas Law Review, 77, 1705–38.Google Scholar
Jayachandran, S. (2006). The Jeffords Effect. Journal of Law & Economics, 49(2), 397–425.Google Scholar
Jiang, L. (2019). Disclosure’s Last Stand? The Need to Clarify the “Informational Interest” Advanced by Campaign Finance Disclosure. Columbia Law Review, 119, 487–526.Google Scholar
Khurana, R., Fisman, R., Galef, J. & Wang, Y. (2012). Estimating the Value of Connections to Vice-President Cheney. B.E. Journal of Economic Analysis & Policy, 13(3), Article 5.Google Scholar
Knight, B. (2007). Are Policy Platforms Capitalized into Equity Prices? Evidence from the Bush/Gore 2000 Presidential Election. Journal of Public Economics, 90(4–5), 751–73.Google Scholar
LaPira, T. M., Drutman, L. & Kosar, K. R. (2020). Congress Overwhelmed: The Decline in Congressional Capacity and Prospects for Reform. Chicago: University of Chicago Press.Google Scholar
Laufer, W. S. (2003). Social Accountability and Corporate Greenwashing. Journal of Business Ethics, 43(3), 253–61.Google Scholar
Lenway, S. A., Schuler, D. A., Marens, R. R., Werner, T., & Green, C. D. 2022. The Evolving Political Marketplace: Revisiting Sixty Years of Theoretical Dominance through a Review of Corporate Political Activity Scholarship in Business & Society and Major Management Journals. Business & Society, 61(5), 1416–70.Google Scholar
Lyon, T. P. & Mandelkorn, W. (2023). The Meaning and Measurement of CPR. In Lyon, T., ed., Corporate Political Responsibility. Cambridge, UK: Cambridge University Press.Google Scholar
Massoglia, A. & Evers-Hillstrom, K. (2021). ‘Dark Money’ Topped $1 Billion in 2020, Largely Boosting Democrats. OpenSecrets.org, March 17.Google Scholar
McDonnell, M-H. & Werner, T. (2016). Blacklisted Businesses: Social Activists’ Challenges and the Disruption of Corporate Political Activity. Administrative Science Quarterly, 61(4), 584–620.CrossRefGoogle Scholar
McWilliams, A. & Siegel, D. (1997). Event Studies in Management Research: Theoretical and Empirical Issues. Academy of Management Journal, 40(3), 626–57.Google Scholar
Milyo, J. (2014). Corporate Influence and Political Corruption: Lessons from Stock Market Reactions to Political Events. The Independent Review, 19(1), 19–36.Google Scholar
Minefee, I., McDonnell, M-H. & Werner, T. (2021). Reexamining Investor Reaction to Covert Corporate Political Activity: A Replication and Extension of Werner (2017). Strategic Management Journal, 42(6), 1139–58.Google Scholar
Panagopoulos, C., Green, D. P., Krasno, J., Schwam-Baird, M. & Endres, K. (2020). Partisan Consumerism: Experimental Tests of Consumer Reactions to Corporate Political Activity. Journal of Politics, 82(3), 996–1007.Google Scholar
Parkinson, J. (2003). Disclosure and Corporate Social and Environmental Performance: Competitiveness and Enterprise in a Broader Social Frame. Journal of Corporate Law Studies, 3(1), 3–39.Google Scholar
Prabhat, S. & Primo, D. M. (2019). Risky Business: Do Disclosure and Shareholder Approval of Corporate Political Contributions Affect Firm Performance? Business & Politics, 21(2), 205–39.Google Scholar
President’s Commission on Campaign Costs. (1962). Financing Presidential Campaigns: Report of the President’s Commission on Campaign Costs. Boston, MA: John F. Kennedy Presidential Library and Museum.Google Scholar
Primo, D. M. & Milyo, J. D. (2020). Campaign Finance and American Democracy: What the Public Really Thinks and Why It Matters. Chicago: University of Chicago Press.Google Scholar
Roberts, B. (1990). A Dead Senator Tells No Lies: Seniority and the Distribution of Federal Benefits. American Journal of Political Science, 34(1), 31–58.Google Scholar
Sachs, B. (2012). Unions, Corporations, and Political Opt-Out Rights after Citizens United. Columbia Law Review, 112, 800–69.Google Scholar
Seligman, J. (2003). The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance. 3rd ed. New York: Aspen Publishers.Google Scholar
Shanor, A., McDonnell, M-H. & Werner, T. (2022). Corporate Political Power: The Politics of Reputation and Traceability. Emory Law Journal, 71, 153–216.Google Scholar
Shaw, K. (2016). Taking Disclosure Seriously. Yale Law & Policy Review, Inter Alia, April 3.Google Scholar
Sitaraman, G. (2014). Contracting around Citizens United. Columbia Law Review, 114, 755–806.Google Scholar
Skaife, H. A. & Werner, T. (2020). Changes in Firms’ Political Investment Opportunities, Managerial Accountability, and Reputational Risk. Journal of Business Ethics, 163(2), 239–63.Google Scholar
Smyth, J. C. & Seewer, J. (2020). Ohio House Speaker, 4 Others Arrested in $60M Bribery Case. Associated Press, July 21.Google Scholar
Strattman, T. & Verret, J. W. (2015). How Does the Corporate Political Activity Allowed by Citizens United v. Federal Election Commission Affect Shareholder Wealth? Journal of Law & Economics, 58(3), 545–59.Google Scholar
Tullock, G. (1972). The Purchase of Politicians. Western Economic Journal, 5(3), 224–32.Google Scholar
Walker, E. T. (2023). What Drives Firms to Disclose Their Political Activity? In Lyon, T., ed., Corporate Political Responsibility. Cambridge, UK: Cambridge University Press.Google Scholar
Werner, T. (2011). The Sound, the Fury, and the Nonevent: Business Power and Market Reactions to the Citizens United Decision. American Politics Research, 39 (1), 118–41.Google Scholar
Werner, T. (2015). Gaining Access by Doing Good: The Effect of Sociopolitical Reputation on Firm Participation in Public Policy Making. Management Science, 61(8), 1989–2011.Google Scholar
Werner, T. (2017). Investor Reaction to Covert Corporate Political Activity. Strategic Management Journal, 38(12), 2424–43.Google Scholar
Werner, T. & Coleman, J. J. (2015). Citizens United, Independent Expenditures, and Agency Costs: Reexamining the Political Economy of State Antitakeover Statutes. Journal of Law, Economics, & Organization, 31(1), 127–59.Google Scholar
Winkler, A. (2004). Other People’s Money: Corporations, Agency Costs, and Campaign Finance Law. Georgetown Law Journal, 92, 871–940.Google Scholar
Yablon, R. (2017). Campaign Finance Reform without Law. Iowa Law Review, 103, 185–243.Google Scholar