Abstract

http://ssrn.com/abstract=1973771
 
 

References (87)



 
 

Citations (7)



 


 



Corporate Politics, Governance, and Value Before and After Citizens United


John C. Coates, IV


Harvard Law School

December 23, 2011


Abstract:     
This paper explores corporate politics, governance and value in the S&P 500 before and after Citizens United. In regulated and government-dependent industries (e.g., banking, telecommunications), political activity is nearly universal, and uncorrelated with measures of shareholder power, managerial agency costs, or value. But 11% of CEOs in 2000 who retired by 2011 obtained political positions after retiring, and in a majority of industries (e.g., apparel, retail), political activity is common but varied, and correlates negatively with measures of shareholder power (concentration, rights), positively with signs of managerial agency costs (corporate jet use by CEOs), and negatively with shareholder value (industry-relative Tobin’s q). The negative politics-value relationship is stronger in firms making large capital expenditures, suggesting that politics may lead firms to pursue value-destroying projects, and the relationship is also stronger in regressions with firm and time fixed effects, which rule out many potential omitted variables. After the exogenous shock of Citizens United, corporate lobbying and PAC activity jumped, in both frequency and amount, and firms that were politically active in 2008 had lower value in 2010 than other firms, consistent with politics at least partly causing and not merely correlating with lower value. Overall, the results are inconsistent with politics generally serving shareholder interests, and support proposals to require disclosure of political activity to shareholders.

Number of Pages in PDF File: 44

JEL Classification: D72, G32, G34, G38, K22, K23

working papers series


Download This Paper

Date posted: December 17, 2011 ; Last revised: February 29, 2012

Suggested Citation

Coates, IV, John C., Corporate Politics, Governance, and Value Before and After Citizens United (December 23, 2011). Available at SSRN: http://ssrn.com/abstract=1973771 or http://dx.doi.org/10.2139/ssrn.1973771

Contact Information

John C. Coates (Contact Author)
Harvard Law School ( email )
1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 3,468
Downloads: 585
Download Rank: 9,648
References:  87
Citations:  7

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.359 seconds