Title: Corporate governance and corporate 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.
Subjects: Investor relations, Case studies, Stockholder wealth, Corporations, Law and legislation, Political activity
Places: United States