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Citizens United vs. FEC and corporate political activism

Albuquerque, Rui, Lei, Zicheng, Rocholl, Jörg and Zhang, Chendi (2019) Citizens United vs. FEC and corporate political activism Journal of Corporate Finance, 101547.

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This paper analyzes the effect that the U.S. Supreme Court’s landmark decision on Citizens United vs. FEC had on corporate political activism. The decision opened the door for corporate treasuries to engage in independent political spending. Politically connected firms have lower announcement returns at the ruling than non-connected firms. The estimates suggest that the value of a political connection decreases by $6.9 million. To evaluate the effect of Citizens United on corporate political activism, we explore the fact that Citizens United also lifts bans on independent political spending in states where such bans existed. After the ruling, firms headquartered in states where bans are lifted have fewer state-level connections relative to firms in other states. Overall, our evidence supports the hypothesis that independent political spending crowds out political connections. We do not find any significant crowding-out effects of independent political expenditures on lobbying activity, executive contributions, and political action committees (PAC) contributions.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
Albuquerque, Rui
Rocholl, Jörg
Zhang, Chendi
Date : 6 November 2019
DOI : 10.1016/j.jcorpfin.2019.101547
Copyright Disclaimer : © 2019 Elsevier B.V. All rights reserved.
Uncontrolled Keywords : Corporate political activism; Political connections; Citizens United; Stock returns.
Depositing User : Diane Maxfield
Date Deposited : 13 Nov 2019 12:41
Last Modified : 13 Nov 2019 12:41

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