The Value of Corporate Political Donations: Evidence from the Capitol Riot

50 Pages Posted: 14 Jan 2022 Last revised: 5 May 2023

See all articles by Christopher Poliquin

Christopher Poliquin

UCLA Anderson School of Management

Young Hou

University of Virginia

Date Written: April 26, 2023

Abstract

Corporate political action committees donate $300 million to federal political candidates each election cycle, but research offers mixed evidence regarding the value of these contributions. We estimate the value of firms’ campaign contributions by studying the decision of 161 S&P 500 companies to stop donations following a riot in the U.S. Capitol. Average cumulative abnormal returns over the two days following firms’ decisions were −0.6 percent. There is no significant relationship between abnormal returns and (a) the amount of political contributions, (b) the intensity of regulation in a firm’s industry, (c) firms’ lobbying expenditures, or (d) measures of ESG performance and political accountability. Firms reduced their donations as promised, but many resumed giving within the year; and firms with greater pre-riot donations resumed giving faster.

Keywords: political action committee, donations, nonmarket strategy, campaign finance

JEL Classification: D72, K29, G38

Suggested Citation

Poliquin, Christopher and Hou, Young, The Value of Corporate Political Donations: Evidence from the Capitol Riot (April 26, 2023). Available at SSRN: https://ssrn.com/abstract=4005515 or http://dx.doi.org/10.2139/ssrn.4005515

Christopher Poliquin (Contact Author)

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095
United States

Young Hou

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

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