Corporate Campaign Spending: Giving Shareholders a Voice

Playing on Two Chessboards: Reputation Effects between Corporate Social Responsibility (CSR) and Corporate Political Activity (CPA)

“…Another reason why CPA may undermine a firm's reputation is that firms often are not very transparent about their political efforts, regardless of whether they are organized individually or collectively. Political contributions are usually not disclosed to the board or shareholders, nor are political expenditures generally subject to oversight as part of a firm's internal controls (Torres‐Spelliscy, , p. 15). Collective or outsourced CPA may make the link to the firm even more opaque and difficult to trace.…”

“…However, in recent years, there have been increasing concerns about firms crossing the line between legitimate participation in democratic decision making and the opportunistic pursuit of self‐interest; it is felt that businesses may have obtained too much power. For example, in the United States, fears about firms' ability to corrupt the political process have increased after the Supreme Court's decision to deregulate campaign spending (Torres‐Spelliscy, ). Other studies have shown a correlation between political spending and problems with corporate governance and long‐term financial performance, suggesting that corporate spending may be detrimental to shareholders as well as to society (Aggarwal et al., ).…”

Corporate Dystopia

“…We have reasons to resist and amend such a legal framework. Remedies are certainly available, from giving corporate members a voice (Torres-Spelliscy, 2010), to allowing corporate members to allocate funds to activities other than campaign expenditures (Hill, 2011), to corrective legislation in Congress 43 that would overturn the decision by constitutional amendment (Sullivan, 2010). It is beyond the scope of this article to entertain that question.…”

“…The argument is twofold. First, whenever the corporation engages in political activities, corporate members as a whole are made to contribute to political positions that only some of them or even none of them support (Coates, 2010; Torres-Spelliscy, 2010). Corporate members provide economic assistance, however unintended, for corporate political activities.…”

“…From the shareholder perspective, investors should purchase stock in corporations without fear that their money will be used to support candidates with whom they do not agree (Torres-Spelliscy, 2010). A person may not want her dues to be spent in support of political candidates but nevertheless may want to maintain an association with the organization because of the myriad benefits—not only the financial benefits—it provides.…”