Public Pension Funds and Corporate Political Activism
50 Pages Posted: 4 Mar 2015 Last revised: 8 Sep 2017
Date Written: September 1, 2017
This paper analyzes agency conflicts between U.S. public pension funds and other shareholders. It studies the landmark decision by the U.S. Supreme Court on Citizens United v. FEC, which opens new doors for political activism by business. At the ruling, politically connected firms held by public pension funds have lower announcement returns. After the ruling, these firms remain engaged in political connections and experience a relative increase in ownership by public pension funds. Our evidence is consistent with public pension funds having a preference for more traditional forms of political activism, a preference not shared by other investors.
Keywords: Institutional Investors, Political Activism, Political Contributions, Political Connections, Citizens United
JEL Classification: G14, G30
Suggested Citation: Suggested Citation