The Securities Exchange Act Is a Material Girl, Living in a Material World: A Response to Bebchuk and Jackson's 'Shining Light on Corporate Political Spending'
Harvard Business Law Review, Vol. 3, No. 2, pp. 453-471, 2013
22 Pages Posted: 11 Sep 2015
Date Written: September 11, 2015
This Article responds to a piece by Lucian Bebchuk and Robert Jackson, “Shining Light of Corporate Political Spending,” which argues in favor of a rulemaking petition submitted by the authors to initiate a mandatory rule pursuant to the Securities Exchange Act requiring companies to disclose political expenditures, including contributions to politically active non-profits. This Article explores the economic cost-benefit analysis requirements that constrain SEC rulemaking and argues that when making a mandatory disclosure rule the SEC must demonstrate that the subject of the disclosure is material to investors. It shows how Bebchuk and Jackson have not made a sufficient case that corporate political expenditures meet that materiality threshold, nor that a mandatory disclosure rule would meet the SEC’s cost-benefit analysis requirements. This is true particularly in light of how a mandatory disclosure rule risks inhibiting corporate freedom of speech.
Keywords: corporate political spending, cost benefit analysis, mandatory disclosure rule, materiality, Securities and Exchange Commission, SEC, Securities Exchange Act
JEL Classification: K22
Suggested Citation: Suggested Citation