Institutional Investors and Corporate Political Activism

Albuquerque, Rui A.; Lei, Zicheng; Rocholl, Jörg; Zhang, Chendi

Institutional Investors and Corporate Political Activism

53 Pages Posted: 4 Nov 2015

Rui A. Albuquerque

Boston College, Carroll School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Zicheng Lei

University of Surrey - Finance and Accounting Group

Jörg Rocholl

ESMT European School of Management and Technology

Chendi Zhang

University of Warwick - Finance Group

There are 3 versions of this paper

Date Written: November 2015

Abstract

The landmark decision by the U.S. Supreme Court on Citizens United v. Federal Election Commission asserts for the first time that corporations benefit from First Amendment protection regarding freedom of speech in the form of independent political expenditures, thus creating a new avenue for political activism. This paper studies how corporations adjusted their political activism in response to this ruling. The paper presents evidence consistent with the hypothesis that institutional investors have a preference for not using the new avenue for political activism, a preference not shared by other investors.

Keywords: Citizens United, Corporate Governance, Institutional Investors, Political Activism

JEL Classification: G23, G30

Suggested Citation: Suggested Citation

Albuquerque, Rui A. and Lei, Zicheng and Rocholl, Joerg and Zhang, Chendi, Institutional Investors and Corporate Political Activism (November 2015). CEPR Discussion Paper No. DP10916. Available at SSRN: https://ssrn.com/abstract=2685673