Corporate Contributions to Ballot Measure Campaigns: Real Effects and Valuation

Abstract

We analyze novel data on corporate contributions to ballot initiatives and referendums at the U.S. state level. Firms make significant contributions to ballot measures in favor of or against specific initiatives. Analysts revise their forecasts in response to ballot measure outcomes. Firms experience economically large changes in sales following the passage of important ballot measures. Firms that contribute to successful (failed) direct initiated state initiatives exhibit significantly positive (negative) CARs around the election. Ballot measure spending represents a distinct and economically important dimension of firms’ political strategy. Ballot measure outcomes have important consequences for firms and their shareholders.

Keywords: Ballot initiatives, Direct democracy, Corporate political contributions, Real effects

JEL Classification: G30, G32, D72