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4 - What Drives Firms to Disclose Their Political Activity?

from Section II - Transparency: Causes and Consequences

Published online by Cambridge University Press:  16 November 2023

By
Edward T. Walker
Edited by
Thomas P. Lyon
Thomas P. Lyon
Affiliation:
University of Michigan, Ann Arbor
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Summary

Given growing worry about dark money electoral spending and covert forms of business lobbying – neither of which generally require federal reporting – a shareholder-activist movement has emerged to pressure companies to increase their voluntary political disclosures. This chapter investigates how companies are pressured for greater disclosure and how they respond. I find that firms are likely to be targeted if they are larger and more prominent, and engage in higher levels of conventional lobbying and electoral spending. Additional qualitative evidence shows that targeting follows from a firm’s receptivity to engagement and also if their spending appears contradictory to corporate values. Lastly, I investigate the likelihood that shareholder activism is successful, finding that apparent concessions are more likely after repeated targeting and during years of S&P 500 index constituency. The chapter draws conclusions about the prospects for greater transparency of corporate political expenditures in a time of uncertain government oversight.

Keywords

transparencycorporate political expendituresshareholder-activismshareholder resolutionstargetingsocial movementssocially responsible investment (SRI) fundspublic pension fundsreligious shareholder activismcorporate political accountabilitycorporate political responsibilitydark moneyelectoral spendinglobbyingastroturf lobbyingCitizens Unitedindependent expenditures
Type
Chapter
Information
Corporate Political Responsibility , pp. 101 - 123
Publisher: Cambridge University Press
Print publication year: 2023

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