Direct Democracy, Corporate Political Strategy, and Firm Value

53 Pages Posted: 10 Mar 2021 Last revised: 8 Sep 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: September 2, 2021


We analyze a novel data set of 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. Firms that contribute to successful (failed) direct initiated state initiatives exhibit significantly positive (negative) CARs around the election. They also experience significant sales, investment, and net income growth in the two years following the passage of important ballot measures. The results suggest that ballot measure spending represents a distinct and economically important dimension of firms’ political strategy with important consequences for firm value and real activity.

Suggested Citation

Fahlenbrach, Rüdiger and Ovtchinnikov, Alexei V. and Valta, Philip, Direct Democracy, Corporate Political Strategy, and Firm Value (September 2, 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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Swiss Finance Institute

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European Corporate Governance Institute (ECGI) ( email )

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1000 Brussels

Alexei V. Ovtchinnikov

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351

Philip Valta

University of Bern ( email )

Engehaldenstrasse 4
Bern, 3012

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