Corporate Political Action Committees Research Articles

Corporate Lobbying and ESG Reports: Patterns among US Companies, 1999–2017

AbstractTo lobby legislators, it is important for interest groups to signal their ability to help legislators win elections and provide them with policy-relevant information. We explore for-profit companies’ use of environmental, social, and governance (ESG) reports as a signaling device to promote their reputation to legislators and convey their ability to provide electoral and policymaking support, which is valuable for lobbying. To this end, we create a panel dataset by combining ESG reports issued by US companies and the same companies’ lobbying and campaign contribution records from 1999 to 2017. We expect companies to issue more ESG reports, as well as reports containing more quantitative content, when they lobby. The data conform to our expectations. We also reason that lobbying may be more strongly related to ESG reporting when it is coupled with campaign contributions made by affiliated corporate political action committees, but the data do not support this expectation.

Can Stakeholders Mobilize Businesses for the Protection of Democracy? Evidence from the U.S. Capitol Insurrection

An unprecedented number of major U.S. companies announced changes to their campaign contributions following the Capitol insurrection on January 6, 2021. We analyze the role of corporate stakeholders in these announcements as well as their implications for democratic institutions and business–government relations. Mirroring polarized public reactions to the Capitol insurrection, companies with more Democratic-leaning stakeholders (e.g., employees, consumers, shareholders) were more likely to publicly refuse contributing to Republican legislators who objected to the electoral college results. Moreover, these pledges held up in available campaign finance records through the third quarter of 2021, implying significant losses in corporate political action committee contributions for said Republican legislators. Given increasing polarization and heightened expectations of the civic responsibility of businesses, the partisanship of corporate stakeholders may prove important in mobilizing businesses to protect democratic institutions. However, such stakeholder pressure may also weaken businesses’ bipartisan legislative coalitions and compel corporate influence-seeking activities to go dark.

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

Corporate political action committees donate about $300 million to federal political candidates each election cycle, but research offers mixed evidence on the value of these contributions. We estimate the value of firms' campaign contributions by studying the decision of 159 S&P 500 companies to stop donations following a riot in the U.S. Capitol building. Average cumulative abnormal returns over the two days following firms' announcements to halt donations were -0.6 percent. There is no significant relationship between the magnitude of abnormal returns and (a) the amount of political contributions, (b) the intensity of regulation in a firm's industry, (c) the firm's lobbying expenditures, or (d) the firm's score on governance and political accountability indexes. Analysis of campaign donations following the riot shows that firms mostly honored their pledge to stop donations, at least for the first quarter of 2021. Together, the results suggest campaign donations by corporate political action committees have small effects on firm value.

Firm partisan positioning, polarization, and risk communication: Examining voluntary disclosures on COVID-19.

Research SummaryThe COVID‐19 pandemic will rank among the greatest challenges many executives will have faced and not only due to the operational challenges it posed. Upon entering the U.S. context, the disease was immediately politically polarized, with clear partisan splits forming in risk perceptions of the disease unrelated to science. We exploit this context to examine whether firms' partisan positioning affects whether and how they communicate risk to their investors on a polarized public policy issue. To do so, we examine the covariation between firms' disclosure of COVID‐19 risks and the partisanship of their political giving. Our analysis of earnings call and campaign contribution data for the S&P 500 reveals a positive association between a firm's contributions to Democrats and its disclosure of COVID‐19 risks.Managerial SummaryFrom its onset in the United States, attitudes toward and discourse around the COVID‐19 pandemic was heavily politicized and perceptions of the disease's risks were seen as more serious by Democratic‐identifying individuals than Republican identifiers. In this study, we examine whether this pattern also holds for U.S. publicly traded firms, who can also stake out a political position through their corporate political action committee campaign contributions. In analyses of earnings call transcripts from the first quarter of 2020, we show that the more Republican‐leaning (Democrat‐leaning) a firm's campaign contributions are, the less (more) likely it was to voluntarily disclose risks related to COVID‐19. We argue that these findings hold implications for parties interested in interpreting firm's risk disclosures on politically polarized issues.

How the Workplace Affects Employee Political Contributions

How important is the workplace for employees’ political donations? Contrary to research on workplace political mobilization, existing work assumes that most individual donors contribute ideologically. I link donations of employees and Political Action Committees (PACs) from 12,737 U.S. public companies between 2003 and 2018 to show that 16.7% of employee donations go to employer-PAC-supported candidates. I investigate the dynamics between employee and PAC donations within firm–legislator pairs over time and find that both rank-and-file employees and executives contribute more dollars to company-supported politicians. Firm–employee donation alignment is stronger on powerful and ideologically moderate politicians with high value for the employer. Results from a difference-in-differences design further show modest changes in the partisan composition of employee donations after swift changes in the partisan donations of corporate PACs. The results suggest investment-related rather than ideological motives for alignment and highlight the importance of corporations for money in politics.

The impact of political connections on government bailout: the 2008 credit crunch in the United States

Why is there so little money in contributions to political action committees (PAC) in United States’ politics? While there may be several explanations for this puzzle, we consider corporate PAC contributions as an insurance-like instrument that induces firms’ expectations of safeguard at times of grave need, with the 2008 credit crunch as a case in point. Given the unlikely occurrence of a credit crunch, few financial firms invest in PAC contributions. However, we find firms that make PAC contributions may gain ex ante benefits of corporate PACs as protection from financial distress by undertaking profitable but risky projects that later become illiquid assets while requiring the bailout money during the 2008 credit crunch. We also find that both consistent PAC investments over election cycles and subsequent lobbying activity to corporate PACs further allow firms to utilize their political ties as safeguard and demand additional bailout money. Our instrumental variable analysis confirms that firms with prior experience in political investments are found to enhance the likelihood and effectiveness of PAC contributions and related political investments.

Donations and dependence: Individual contributor strategies in house elections

Despite the importance of individual contributors to financing federal candidates, past work has largely neglected this crucial financial constituency in favor of research on corporate and trade political action committees (PACs). By contrast, in this study I offer the first analysis of aggregate contributions from the population of individual contributors to House candidates. Using an original big dataset constructed from over fifteen million Federal Election Commission (FEC) disclosure records, I identify individual contributors (rather than contributions) and trace the variation in their strategies across types of House candidates. I distinguish between frequent donors, who are theorized to have more contact with members of Congress, versus infrequent donors in these elections. I find evidence that the character of aggregate donations from repeat donors is more access-oriented even while controlling for other salient candidate characteristics. Funds from infrequent donors, in contrast, appear more ideologically motivated. By also examining the percentage of funds that House candidates receive from repeat donors, I show that the fundraising coalitions of candidates may reproduce reliance on more access-oriented, repeat donors despite the influx of dollars from infrequent donors. I suggest that my findings provide a persuasive case for re-evaluating the diversity of roles individual contributors play in the campaign finance system, and for systematically analyzing variation in contributor strategies.

Business Interests and the Party Coalitions

We identify the economic interests in the United States that have a partisan alignment. We disaggregate corporate and trade association political action committees by economic sector, using the most fine-grained classifications available. We then analyze the campaign contributions to House incumbents from each sector, controlling for the majority party, economic geography, committee membership, and electoral competition. We find wide variation in how economic sectors relate to the parties. More than one third have a clear party tilt, with far more leaning toward Republicans than to Democrats. The remainder have no discernible partisan preference, either giving without reference to party or opportunistically to the majority. Republican-leaning sectors concentrate in particular enterprises, especially natural resources extraction, while most professional service sectors are nonpartisan. Business is not a monolith, to be contrasted with “labor” or “ideological interest groups,” but embedded in economic sectors that are more or less politicized in partisan terms.

PACking a punch: Political Action Committees and corruption

Political Action Committees (PACs) are unique and prominent players in American politics. Yet, formal research on some aspects of PACs is lacking. Using US data over the period 1970 to 2009, this research demonstrates that the growth in PACs is positively associated with greater corruption. A 10% increase in the number of PACs per capita would increase corruption by about 8%. Upon disaggregation, corporate PACs, rather than labour PACs, are positively associated with corruption. The effects of economic prosperity, government size and population on US corruption are generally in line with the literature.

Determinants and Effects of Corporate Lobbying

We examine the determinants and value effects of corporate lobbying, controlling for corporate political action committee (PAC) campaign contributions. We find evidence that firms with greater potential payoffs from favorable policy and regulations lobby most actively, and that managers often utilize both lobbying and campaign contribution channels to influence the political climate affecting the firm. We also find that shareholders value the lobbying activities pursued by management on their behalf, particularly if the firm does not have a PAC that contributed to an election campaign. The results are robust to a number of tests designed to mitigate potential omitted‐variable and self‐selection bias.

Evidence of a transnational capitalist class‐for‐itself: the determinants of PAC activity among foreign firms in the Global Fortune 500, 2000–2006

AbstractTransnational capitalist class (TCC) theory is rooted in the claim that the globalization of the economy has led to a globalization of economic interests and of class formation. However, systematic evidence linking the indicators of transnational class formation with political behaviour is largely missing. In this article, I combine data on board of director interlocks among the 500 largest business firms in the world between 2000 and 2006 with data on the political donations to US elections of foreign corporations via the corporate political action committees (PACs) of their subsidiaries, divisions or affiliates. Controlling for the various interests of individual firms, I find that foreign firms that are highly central in the transnational intercorporate network contribute more money to US elections than do the less central foreign firms. Given prior research on board of director interlocks, this finding suggests that a segment of the transnational business community has emerged as a class‐for‐itself.

Political Ideologies of CEOs

This article examines the influence on organizational outcomes of CEOs’ political ideology, specifically political conservatism vs. liberalism. We propose that CEOs’ political ideologies will influence their firms’ corporate social responsibility (CSR) practices, hypothesizing that (1) liberal CEOs will emphasize CSR more than will conservative CEOs; (2) the association between a CEO’s political ideology and CSR will be amplified by a CEO’s relative power; and (3) liberal CEOs will emphasize CSR even when recent financial performance is low, whereas conservative CEOs will pursue CSR initiatives only as performance allows. We test our ideas with a sample of 249 CEOs, measuring their ideologies by coding their political donations over the ten years prior to their becoming CEOs. Results indicate that the political ideologies of CEOs are manifested in their firms’ CSR profiles. Compared with conservative CEOs, liberal CEOs exhibit greater advances in CSR; the influence of CEOs’ political liberalism on CSR is amplified when they have more power; and liberal CEOs’ CSR initiatives are less contingent on recent performance than are those of conservative CEOs. In a corroborative exploration, we find that CEOs’ political ideologies are significantly related to their corporate political action committee (PAC) allocations, indicating that this largely unexplored executive attribute might be more widely consequential.

Corporate Tax Avoidance And Political Action Committee Contributions: An Empirical Analysis

This study examines the relationships between corporate tax avoidance and Political Action Committee (PAC) contributions. The study hypothesizes that corporate PAC contributions influence corporate tax avoidance behavior. However, the tax savings associated with corporate PAC contributions do not increase monotonically because of significant wealth transfers from voters to corporations and the subsequent brokering behavior of politicians in favor of the voter constituency. The results are consistent with our hypothesis.

Corporate Campaign Contributions, Repeat Giving, and the Rewards to Legislator Reputation

Abstract Are politicians who follow a strategy of reputational development rewarded with high levels of corporate campaign contributions? Reputational clarity could help to reduce uncertainty about a candidate and lead to greater campaign contributions from favored interests. Alternatively, such clarity could alienate those who disagree and prevent the politician from obtaining contributions from groups on both sides of an issue. We outline an approach that considers conditions under which a politician would or would not prefer reputational development and policy‐stance clarity and consistency in the context of repeat dealing with special interests. Our proxy for reputational development is the percentage of repeat givers to a legislator. Using data on corporate political action committee (PAC) contributions to members of the U.S. House during the seven electoral cycles from 1983/84 to 1995/96, we explore a variety of alternative hypotheses and find that greater reputational development is rewarded with g...

Don’t Bite The Pac That Feeds You

Previous research has found evidence that in high-profile cases, political action committees (PACs) sometimes punish members of Congress for voting in opposition to the PACs’ interests. This finding contradicts the conventional understanding of campaign contributions as an inducement or reward for voting record or access to a member of Congress. To understand better the dimensions of the punishment strategy, we test whether corporate PACs engage in punishment by examining the pattern of contributions of finance and insurance PACs in the wake of the House vote on granting permanent normal trade relations (PNTR) with China in May 2000. Using ordinary least squares regression models, we find support for a punishment strategy of finance and insurance PACs as a result of a no vote on PNTR. The magnitude of the punishment is highest for those members of the House who have the strongest relationship with the PAC.

Pharmaceutical Prices and Political Activity

Drug prices have been a conspicuous political issue in much of recent history, but no more so than during health care reform debates in 1993 and 1994. This paper investigates possible effects of political activity on pharmaceutical prices, with a particular focus on the health care reform period. It evaluates the extent to which pharmaceutical companies slowed the rates at which they increased prices in an attempt to preempt government intervention. To do so, we characterize companies based on their vulnerability to future price regulation. We then consider patterns in price movements across companies. The results suggest that companies whose drugs had longer patent lives and who had recently increased contributions to their corporate Political Action Committees (PACs) slowed price increases during 1992 and 1994 more than their competitors. It is difficult to distinguish pricing differences across companies in 1993, perhaps because most companies had pledged to keep price increases below the rate of inflation.

The Two Faces of Capital: Corporations and Individual Capitalists as Political Actors

Widespread access to public records of campaign contributions by corporate political action committees (PACs) have made these the preferred data for analyzing political partisanship within the capitalist class. By comparison, data on political contributions by individual capitalists were, until recently, difficult to obtain and rarely subjected to systematic study. Important differences are demonstrated between these two forms of capitalist political action by directly comparing the campaign contributions of 592 individual capitalists with the contributions of the 394 major corporations with which those capitalists were associated. Campaign contributions by individual capitalists follow a logic different from that of corporate PACs. Corporations are generally more interested in buying influence with incumbents, while individual capitalists are more concerned with bolstering the election prospects offavored candidates. By providing a more direct measure of capitalists'political preferences, the analysis of campaign contributions by individual capitalists clarifies theoretical questions that remain unresolved in the research based on corporate PACs. Variables that elude measurement when corporations are the units of analysis (e.g., ethnicity) are shown to have important consequences for capitalist political partisanship.

The Two Faces of Capital: Corporations and Individual Capitalists as Political Actors

Widespread access to public records of campaign contributions by corporate political action committees (PACs) have made these the preferred data for analyzing political partisanship within the capitalist class. By comparison, data on political contributions by individual capitalists were, until recently, difficult to obtain and rarely subjected to systematic study. Important differences are demonstrated between these two forms of capitalist political action by directly comparing the campaign contributions of 592 individual capitalists with the contributions of the 394 major corporations with which those capitalists were associated. Campaign contributions by individual capitalists follow a logic different from that of corporate PACs. Corporations are generally more interested in buying influence with incumbents, while individual capitalists are more concerned with bolstering the election prospects of favored candidates. By providing a more direct measure of capitalists’ political preferences, the analysis of campaign contributions by individual capitalists clarifies theoretical questions that remain unresolved in the research based on corporate PACs. Variables that elude measurement when corporations are the units of analysis (e.g., ethnicity) are shown to have important consequences for capitalist political partisanship.

The Effects of the North American Free Trade Agreement on Corporate and Labor Pac Contributions

This study investigates the impact congressional roll call votes on the North American Free Trade Agreement (NAFTA) had on corporate and labor political action committee (PAC) contributions during the 1994 House elections. The results show that corporate PACs gave more money to incumbents who voted in favor of NAFTA and that labor PACs contributed less money to pro-NAFTA incumbents, including Democrats in competitive races. The findings mark a departure from the existing literature, which indicates that corporations and unions rarely place an emphasis on particular roll call votes when providing their campaign money to candidates.

How Much Is Majority Status in the U.S. Congress Worth?

A key premise of partisan theories of congressional organization is that majority status confers substantial procedural advantages. In this article, we take advantage of changes in party control of the House and Senate, such as that following the Republicans' historic victory in the midterm elections of 1994, to assess the value of majority status in terms of contributions from access-seeking political action committees (PACs). We estimate that majority status in the House was worth about $36,000 per member in receipts from corporate and trade PACs circa 1994—even controlling for the usual factors cited in the literature as affecting members' ability to raise money (such as committee assignments and voting record). The value of majority status in the Senate is even larger in absolute terms, although smaller in proportion to the total amount of money raised. Our results show that majority status is a valuable asset, one worth considerable collective effort to attain.