Corporate governance and corporate political activity
Subtitle: what effect will citizens united have on shareholder wealth
By: John C. Coates IV
Contributors: John M. Olin Center for Law, Economics, and Business
Series: Discussion paper -- no. 684; Discussion paper (John M. Olin Center for Law, Economics, and Business : Online) -- no. 684.
Publisher: Harvard Law School
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Subjects: Investor relations; Case studies; Stockholder wealth; Corporations; Law and legislation; Political activity
Description: "Abstract: In Citizens United, the Supreme Court relaxed the ability of corporations to spend money on elections, rejecting a shareholder-protection rationale for restrictions on spending.  Little research has focused on the relationship between corporate governance -- shareholder rights and power -- and corporate political activity.  This paper explores that relationship in the S&P 500 to predict the effect of Citizens United on shareholder wealth.  The paper finds that in the period 1998-2004 shareholder-friendly governance was consistently and strongly negatively related to observable political activity before and after controlling for established correlates of that activity, even in a firm fixed effects model.  Political activity, in turn, is strongly negatively correlated with firm value.  These findings -- together with the likelihood that unobservable political activity is even more harmful to shareholder interests -- imply that laws that replace the shareholder protections removed by Citizens United would be valuable to shareholders"--John M. Olin Center for Law, Economics, and Business web site.
Notes: Title from PDF file as viewed on 12/16/2010.

Includes bibliographical references.

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