Abstract

http://ssrn.com/abstract=2172638
 
 

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


John C. Coates, IV


Harvard Law School

December 2012

Journal of Empirical Legal Studies, Vol. 9, Issue 4, pp. 657-696, 2012

Abstract:     
How did corporate politics, governance, and value relate to each other in the S&P 500 before and after Citizens United? In regulated and government‐dependent industries, politics is nearly universal, and uncorrelated with shareholder power, agency costs, or value. However, 11 percent of CEOs in 2000 who retired by 2011 obtained political positions after retiring and, in most industries, political activity correlates negatively with measures of shareholder power, positively with signs of agency costs, and negatively with shareholder value. The politics‐value relationship interacts with capital expenditures, and is stronger in regressions with firm and time fixed effects, which absorb many omitted variables. After the shock of Citizens United, corporate lobbying and PAC activity jumped, in both frequency and amount, and firms 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: 40

Accepted Paper Series





Date posted: November 8, 2012  

Suggested Citation

Coates, IV, John C., Corporate Politics, Governance, and Value Before and after Citizens United (December 2012). Journal of Empirical Legal Studies, Vol. 9, Issue 4, pp. 657-696, 2012. Available at SSRN: http://ssrn.com/abstract=2172638 or http://dx.doi.org/10.1111/j.1740-1461.2012.01265.x

Contact Information

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