Corporate Contributions to Ballot Measure Campaigns: Real Effects and Valuation

Abstract

We analyze novel data on corporate contributions to ballot initiatives at the U.S. state level. Firms make significant contributions to ballot measure campaigns in favor of or against specific initiatives. They contribute significantly more to business initiatives compared to ideological initiatives. Ballot initiatives have important consequences for firms. While all firms in affected industries experience changes in sales growth following the passage of important ballot measures, contributing firms experience an additional, economically large effect. Following successful (failed) initiatives, all firms in affected industries exhibit significantly more positive (negative) CARs around the election but contributing firms do more so than peers.

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

JEL Classification: G30, G32, D72