Shooting Your Brand in the Foot: What Citizens United Invites
68 Pages Posted: 26 Sep 2015 Last revised: 3 Nov 2016
Date Written: September 25, 2015
Part of what makes corporate political spending so fraught is the how valuable brand identity is to the average firm, the heterogeneous political views of customers and shareholders, as well as the increasing political polarization of the many segments of the America public. This means that corporate political spending which associates a brand with one political party is likely to alienate customers or shareholders who feel strongly affiliated with the opposite political party. American consumers have a long tradition of boycotting goods or services for political reasons and American shareholders have a history of divesting to make a political point. Thus there is a nontrivial risk that customers and investors will vote with their dollars when they discover corporate political activity. Furthermore, the ability to boycott or divest has been given a technological boost with the advent of multiple smartphone applications that provide end-users with instantaneous data about the politics behind mass marketed brands. This technology empowers a consumer to buy goods that are more closely aligned with the consumer’s political views and for investors to do the same with stocks. Finally this piece explores how consumer groups and investors have both coordinated efforts to pressure firms to leave the American Legislative Exchange Council (ALEC). This type of orchestrated one-two punch could be the wave of the future for politically active firms.
Keywords: branding, corporate governance, agency costs, money in politics, campaign finance, boycott, divest, risk, corporate political activity, corporate political spending, Citizens United, Bellotti
JEL Classification: K20, K22
Suggested Citation: Suggested Citation