The Untenable Case for Keeping Investors in the Dark

58 Pages Posted: 10 Nov 2018

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)

Robert J. Jackson, Jr.

Professor of Law

James David Nelson

University of Houston Law Center

Roberto Tallarita

Harvard Law School

Date Written: November 1, 2018

Abstract

This Article seeks to contribute to the heated debate on the disclosure of political spending by public companies. A rulemaking petition urging SEC rules requiring such disclosure has attracted over 1.2 million comments since its submission seven years ago, but the SEC has not yet made a decision on the petition. The petition has sparked a debate among academics, members of the investor and issuer communities, current and former SEC commissioners, and members of Congress. In the course of this debate, opponents of mandatory disclosure have put forward a wide range of objections to such SEC mandates. This Article provides a comprehensive and detailed analysis of these objections, and it shows that they fail to support an opposition to transparency in this area.

Among other things, we examine claims that disclosure of political spending would be counterproductive or at least unnecessary; that any beneficial provision of information would best be provided through voluntary disclosures of companies; and that the adoption of a disclosure rule by the SEC would violate the First Amendment or at least be institutionally inappropriate. We demonstrate that all of these objections do not provide, either individually or collectively, a good basis for opposing a disclosure rule. The case for keeping political spending under the radar of investors, we conclude, is untenable.

Keywords: political spending, SEC, disclosure, transparency

JEL Classification: G3, G34, G38, K2, K22

Suggested Citation

Bebchuk, Lucian A. and Jackson, Jr., Robert J. and Nelson, James David and Tallarita, Roberto, The Untenable Case for Keeping Investors in the Dark (November 1, 2018). Available at SSRN: https://ssrn.com/abstract=3281791 or http://dx.doi.org/10.2139/ssrn.3281791

Lucian A. Bebchuk (Contact Author)

Harvard Law School ( email )

Cambridge, MA 02138
United States
617-495-3138 (Phone)
617-812-0554 (Fax)

HOME PAGE: http://www.law.harvard.edu/faculty/bebchuk/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)

Robert J. Jackson, Jr.

Professor of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

James David Nelson

University of Houston Law Center ( email )

4604 Calhoun Road
Houston, TX 77204-6060
United States

Roberto Tallarita

Harvard Law School ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
164
Abstract Views
871
PlumX Metrics