The anniversary of the landmark campaign finance case, Citizens United, is Saturday, and the evidence suggests that we still can't trust corporate political spending
In January 2010, the Supreme Court handed down the landmark decision Citizens United v. Federal Election Commission, which held that political spending by corporations could not be prohibited by the government, under the First Amendment. One of the court's rationales for why the public shouldn't worry about undue influence by high-spending companies was that shareholders (i.e.: the public) could always pressure companies to spend the money in their interest. As it turns out, that's not always the case.
Last September, I argued on this site that corporations should be required to disclose their political activities and spending. The problem, I wrote, was that if corporations' political spending were left up to individuals, like executives or directors, those individuals could advance their personal interests by directing money to their preferred political organizations. As I wrote:
Corporate executives often own a lot of stock, so they have an incentive to support politicians who will be friendly to their companies. But they are also rich people, so they have an incentive to support politicians who will reduce taxes on the rich (and especially taxes on gains from stock)--even though lower taxes mean less money for the infrastructure spending that many businesses want and even the Chamber of Commerce wants.
Since then, Harvard law professor John Coates has put some effort into figuring out just what corporations are doing with their political spending, and how it affects their shareholders. The short answer, revealed in his new working paper, is that political activities are bad for shareholders.