Direct Democracy, Corporate Political Strategy, and Firm Value

50 Pages Posted: 10 Mar 2021

See all articles by Rüdiger Fahlenbrach

Rüdiger Fahlenbrach

Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute; European Corporate Governance Institute (ECGI)

Alexei V. Ovtchinnikov

HEC Paris - Finance Department

Philip Valta

University of Bern

Date Written: March 9, 2021


We analyze a novel data set of corporate contributions to ballot initiatives and referendums at the U.S. state level between 2003 and 2018. Ballot initiatives and referendums allow citizens of 26 U.S. states to vote directly on legislation. Firms make significant campaign contributions to ballot measure committees in favor of or against specific initiatives that exceed on average their political action committee contributions. Firms that contribute to successful (failed) direct initiated state initiatives generate positive (negative) CARs of 0.32% (-0.21%) on average around the election. They also experience significant sales growth in the two years surrounding successful ballot measure campaigns.

Suggested Citation

Fahlenbrach, Rüdiger and Ovtchinnikov, Alexei V. and Valta, Philip, Direct Democracy, Corporate Political Strategy, and Firm Value (March 9, 2021). Swiss Finance Institute Research Paper No. 21-23, Available at SSRN: or

Rüdiger Fahlenbrach (Contact Author)

Ecole Polytechnique Fédérale de Lausanne ( email )

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Alexei V. Ovtchinnikov

HEC Paris - Finance Department ( email )

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Jouy-en-Josas Cedex, 78351

Philip Valta

University of Bern ( email )

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Bern, 3012

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