Corporate Political Spending Research Articles

Citizens united and state environmental policy, regulations, and outcomes

ABSTRACT The impact of corporate political spending on environmental policy has drawn numerous attention from researchers and policymakers. However, few studies have analyzed the empirical effect of corporate spending on environmental policy in aggregate. In this study, I analyze the impact of corporate independent spending bans on state environmental policy, utilizing the repeal of such bans in 23 states following the 2010 Supreme Court’s Citizens United decision as a research design. Through difference-in-differences tests, I find no evidence that the removal of independent expenditure bans influenced state environmental policy, regulations, or outcomes, or overall policy liberalism. I also find that corporate direct contributions did not increase in treated states, which may explain the lack of environmental policy effects. These results demonstrate that corporations did not utilize the new spending avenue after Citizens United to influence state environmental policy in aggregate and raise questions concerning corporate political spending and environmental preferences.

Corporate political spending and state tax policy: Evidence from Citizens United

To what extent is U.S. state tax policy affected by corporate political contributions? The 2010 Supreme Court Citizens United v. Federal Election Commission ruling provides an exogenous shock to corporate campaign spending, allowing corporations to spend on elections in 23 states which previously had spending bans. Ten years after the ruling and for a wide range of outcomes, we are not able to identify statistically significant effects of corporate independent expenditures on state tax policy, including tax rates, discretionary tax breaks, and tax revenues. Our results allow for a moderate economic effect on corporate tax rates and revenues, but suggest economically insignificant effects for other tax outcomes of interest to firms and their owners. A complementary analysis of the original introduction of the spending bans supports our finding that corporate spending has modest, if any, effects on tax policy.

BOARD GENDER DIVERSITY AND VOLUNTARY CORPORATE POLITICAL SPENDING DISCLOSURE

ABSTRACT As corporations have played an essential role in political funding in the U.S., stakeholders increasingly demand transparency in corporate political spending. This paper examines the relationship between board gender diversity and voluntary disclosure of corporate political spending. Consistent with the stakeholder theory and legitimacy theory, we find that gender diverse boards are positively related with enhanced political spending disclosure. Specifically, we document a positive relationship between a higher ratio of female directors and increased voluntary disclosure quality. The relationship is not statistically significant when there are fewer than three female directors while the relationship is significant when there are at least three female directors, which substantiates critical mass theory. Further analysis shows that the gender balance is a significant indicator of higher quality disclosure among less diverse boards where one gender comprises more than 70%. Keywords Corporate Political Spending, Board Gender Diversity, Voluntary Disclosure

Shining light on corporate political spending: Evidence from shareholder engagements

With surges in U.S. corporate political spending following the Supreme Court’s decision on Citizens United v. FEC, this paper studies the transparency of corporate political spending. We argue that shareholder engagements aimed at improving such transparency are more successful than previously documented in the literature. Some “voluntary” disclosures by firms are the result of settled engagements. Firms with political action committees, weaker political transparency, more politically connected directors, and higher sensitivity to political uncertainty are more likely to be targeted by activist shareholders. Institutional investors, especially socially responsible investment funds, are more likely to succeed after initiating engagements. Using hand-collected public announcements of engagement outcomes, we find that the stock market reacts positively (negatively) to successful (unsuccessful) engagements in politically active firms. Moreover, increased transparency facilitates the investors’ assessment of firms’ exposure to external political risks, the monitoring of firms’ political expenditure, and tacit coordination among industry peers. Collectively, our results suggest that investors value corporate political transparency, especially in the case of politically active firms.

Corporate Political Spending and State Tax Policy: Evidence from Citizens United

Corporate Political Spending and State Tax Policy: Evidence from Citizens United

Winkler, Adam. Beyond Bellotti, 32 Loy. L.A. L. Rev. 133 (1998)

Writing two decades after the Supreme Court of the United States held unconstitutional a ban on corporate political spending to influence ballot-initiative measures in First National Bank of Boston...

The liabilities of foreign institutional ownership: Managing political dependence through corporate political spending

AbstractResearch SummaryThe benefits of foreign institutional ownership (FIO) have been amply researched, but there are also potential downsides to such ownership. High FIO can subject a firm to heightened regulatory scrutiny and compliance, increasing its political dependence. Drawing on resource dependence theory, we argue that firms can manage the political dependence that arises from FIO by engaging in corporate political spending (CPS). We derive two moderating conditions from our theoretical argument, positing that the strength of the positive relationship between FIO and CPS hinges on the intensity of a firm's government contracting and on the political sensitivity of the industry. Our study advances strategic ownership research by highlighting that U.S. firms may need to manage the potential liabilities associated with FIO through nonmarket strategy.Managerial SummaryResearch suggests that firms can reap many benefits from equity investments made by foreign institutional investors. However, such investments may also have potential downsides. We posit that high levels of FIO may subject a firm to increased political and regulatory scrutiny, and that firms can manage this increased exposure to government by engaging in corporate political activities that allow them to monitor and influence the political landscape. To explore this question, we analyzed a large sample of publicly traded U.S. firms and find empirical support for our arguments. Our study highlights an unintended “liability” of FIO that firm executives should be aware of and has practical implications for how firms manage their investors and allocate resources between market and nonmarket strategies.

Shareholder Activism and Voluntary Disclosure Initiation: The Case of Political Spending

ABSTRACTDemand for disclosures on environmental, social, and governance (ESG) issues has increased dramatically. Using corporate political spending disclosures as our setting, we conduct a detailed inquiry of 541 political spending‐related shareholder proposals from 2004 to 2012 to highlight the role of shareholder activism as a mechanism to motivate ESG disclosure. Unlike earlier studies, we examine both proposals that went to a vote and proposals that were withdrawn by the activist, allowing us to assess more comprehensively the success of shareholder activism. We find that 20 percent of firms targeted by disclosure proposals begin disclosing in the subsequent year, although implementation rates vary by proposal type—8 percent for proposals subject to a vote versus 56 percent for proposals withdrawn. The sponsor is also important: unions and public pension funds are less likely than other activists to target firms with agency problems and are less successful in having proposals withdrawn, and the implementations they obtain are viewed more negatively by the broader investor base. Our findings highlight shareholder proposals as one mechanism through which investors can successfully express their preferences for corporate disclosure policies. Given activists' long‐standing interest in environmental and social disclosure policies, we believe our findings generalize to a broader set of ESG disclosures.

Fiduciary Blind Spot: The Failure of Institutional Investors to Prevent the Illegitimate Use of Working Americans’ Savings for Corporate Political Spending

For decades, American workers have been subjected to increasing pressure to become forced capitalists, in the sense that to provide for retirement for themselves, and to pay for college for their children, they must turn part of their income every month over to mutual funds who participate in 401(k) and 529 programs. These “Worker Investors” save for the long term, often hold portfolios that are a proxy for the entire economy, and depend on the economy’s ability to generate good jobs and sustainable growth in order for them to be able to have economic security. In recent years, there has been a heartening improvement in the self-awareness of the major mutual fund families — BlackRock, Vanguard, State Street, and Fidelity (the “Big 4”) — that have Worker Investors’ capital. This Big 4 has grown enormously because of the legal pressures that generate capital inflows to them every month from Worker Investors. To their credit, the Big 4 recognize that they have a duty to think and act in a way aligned with the interests of Worker Investors by encouraging the public companies in which they invest to implement business plans that will generate sound long-term growth. In fact, the Big 4 have recently recognized that unless public companies act in a manner that is environmentally, ethically, and legally responsible, they are unlikely to be successful in the long run. Thus, the Big 4 are more willing than ever to second-guess company management to fulfill their fiduciary duties. In one area, however, the Big 4 continue to have a fiduciary blind spot: they let corporate management spend the Worker Investors’ entrusted capital for political purposes without constraint. The Big 4 abdicate in the area of political spending because they know that they do not have Worker Investors’ capital for political reasons and because the funds do not have legitimacy to speak for them politically. But mutual funds do not invest in public companies for political reasons, and public company management has no legitimacy to use corporate funds for political expression either. Thus, a “double legitimacy” problem infects corporate political spending. This Essay identifies and illustrates this double legitimacy problem, and shows why unconstrained corporate political spending is contrary to the interests of Worker Investors. Precisely because Worker Investors hold investments for the long term and have diversified portfolios that track the whole economy, political spending by corporate managers to tilt the regulatory playing field is harmful to them, as humans who suffer as workers, consumers, and citizens when companies tilt the regulatory process in a way that allows for more pollution, more dangerous workplaces, less leverage for workers to get decent pay and benefits, and more unsafe products and deceptive services. But even as diversified investors, unconstrained corporate political spending is likely to create harm, as both common sense and empirical evidence suggest. Not only that, there is no danger that public companies would have too little voice in the political process if their spending were subject to constraint by stockholders. Corporations have many other tools, including their own PACs funded by voluntary contributions, their lobbying expenditures, and the influence they wield as employers and taxpayers — tools that made business interests predominate in political spending even before Citizens United let them free to spend treasury funds without inhibition. For these reasons, the case against unconstrained corporate political spending is very strong. As of now, however, the Big 4 refuse to support even proposals to require the very disclosure they would need if they were to monitor corporate political spending. And their capacity to monitor if they have the information is lacking. But, if the Big 4 open their fiduciary eyes and follow the recommendation of industry icon Jack Bogle, and vote to require that any political spending from corporate treasury funds be subject to approval of a supermajority of stockholders, they alone could cure the double legitimacy problem of corporate political spending. Because of their substantial voting power, the support of the Big 4 would ensure that this check on illegitimate corporate political spending would be put in place and thus make an important contribution to restoring some basic fairness to our political process.

Does board gender diversity affect the transparency of corporate political disclosure?

Purpose The purpose of this paper is to examine the influence of board gender diversity on the transparency of corporate political disclosure (CPD). Design/methodology/approach Two empirical proxies, CPD transparency and policy transparency, are constructed from a data set jointly produced by the Center of Political Activity and the Carol and Lawrence Zicklin Center for Business Ethics Research. The CPD transparency score measures the level of transparency in voluntary corporate disclosure of the amount of political contributions and the identity of the recipients as well as the titles and names of the executives who authorize the political spending. The policy transparency score measures the level of transparency in the voluntary disclosure of the policies governing corporate political spending. Board gender diversity is measured by the percentage of women on the board of directors. Findings Higher proportions of female directors are associated with more transparent disclosure of political contributions after controlling for a set of corporate governance and firm-level variables. Originality/value This study is the first to examine whether and how gender-diversified boards enhance the transparency of CPD. It contributes to the literature by providing evidence that gender-diversified boards enhance corporate governance.

Voluntary disclosure of corporate political spending

In this paper, we study voluntary political spending disclosure, a widespread yet relatively unexplored corporate voluntary disclosure practice. Using an index created by the CPA-Zicklin Center that measures the level of voluntary political spending disclosure for S&P 500 firms, we examine firm-level characteristics associated with such disclosures, and their importance. We find that firms with greater political expenditures, direct political connections, higher investor activism, better corporate social responsibility performance and governance, and more industry competition tend to have a higher level of political spending disclosure. We also find that a higher level of political spending disclosure is positively associated with both the number of institutional investors and the proportion of shares owned by institutional investors, particularly socially responsible institutional investors, after controlling for the quality of other disclosures. The level of political spending disclosure is also associated with a higher analyst following, lower forecast error, and smaller forecast dispersion. Finally, we find that political spending disclosure enhances the positive relationship between annual corporate political spending and firm financial performance. Together, these results are consistent with the view that voluntary political spending disclosure helps align managers’ interests with those of shareholders.

Corporate Political Speech: Who Decides?

I. INTRODUCTION The Supreme Court spoke clearly this Term on the issue of cor-porate political speech, concluding in Citizens United v. FEC (1) that the First Amendment protects corporations' freedom to spend corporate funds on indirect support of political candidates. (2) Constitutional law scholars will long debate the wisdom of that holding, as do the authors of the two other Comments in this issue. (3) In contrast, this Comment accepts as given that corporations may not be limited from spending money on politics should they decide to speak. We focus instead on an important question left unanswered by Citizens United: who should have the power to decide whether a corporation will engage in political speech? Under existing law, a corporation's decision to engage in political speech is governed by the same rules as ordinary business decisions, which give directors and executives virtually plenary authority. In this Comment, we argue that such rules are inappropriate for corporate political speech decisions. Instead, lawmakers should develop special rules to govern who may make political speech decisions on behalf of corporations. We analyze the types of rules that lawmakers should consider. We also offer a set of proposals, and policymaking consider-ations, for designing such rules. In Part II, we consider existing corporate law rules governing the political speech decision. As long as corporations are permitted to engage in political speech, we show, decisional rules governing whether and how they decide to do so are inevitable. Under existing corporate law rules, corporate political speech decisions are subject to the same rules as ordinary business decisions. Accordingly, corporate political speech decisions do not require shareholder input, a role for independent directors, or disclosure--the safeguards that corporate law rules establish for special corporate decisions. We explain that the interests of directors and executives with respect to political speech decisions may diverge from those of shareholders, (4) that the financial implications of these decisions are hardly trivial, and that the costs of the divergence of interests may be exacerbated by the special expressive significance that these decisions carry for shareholders. We conclude that political speech decisions are substantially different from, and should not be subject to the same rules as, ordinary business decisions. In Part III, we assess lawmakers' choices with respect to rules that would align corporate political speech decisions with shareholder interests. In particular, we suggest that lawmakers consider adopting rules that (i) provide shareholders with a role in determining the amount and targets of corporate political spending; (ii) require that independent directors oversee corporate political speech decisions; (iii) allow shareholders to opt out of--that is, either tighten or relax--each of these first two rules; and (iv) mandate detailed and robust disclosure to shareholders of the amounts and beneficiaries of a corporation's political spending, whether made directly by the company or indirectly through intermediaries. We explain how such rules would benefit shareholders. We also explain why the proposed rules are best viewed not as limitations on corporations' speech rights but rather as a method of determining whether the corporation actually wishes to engage in political speech. Thus, these rules protect, rather than abridge, corporations' First Amendment interests. Part IV discusses an additional objective that decisional rules concerning corporations' political speech may seek to serve: the protection of minority shareholders from forced association with political speech supported by a majority of shareholders. We discuss the economic and First Amendment interests of minority shareholders that lawmakers may seek to protect. Although we conclude that requiring unanimous shareholder approval for corporate political speech would likely be neither desirable nor permissible, we argue that decisional rules addressing political spending opposed by a sufficiently large minority of shareholders should be viewed as constitutionally permissible, and we discuss how lawmakers could best design such rules. …

The Good, the Bad, and the Ugly of Corporate Personhood and Corporate Political Spending: Implications for Shareholders

AbstractIn the Citizens United v. Federal Election Commission (2010) decision, the Supreme Court rendered an opinion verifying the legality of unions and corporations to spend funds from their general treasuries to finance independent expenditures related to political and electioneering communications. Such speech and communications are constitutionally protected by the First Amendment, according to Justice Kennedy, who wrote the majority opinion (558 U.S. 22, 2010). The dissenting opinion questioned whether such rights should accrue to corporations, since corporations differ from constitutionally‐protected “natural persons” (dissent, 558 U.S. 50 at 2, 2010; Johnson 2011). The decision ignited a firestorm of controversy, which renewed interest in the legal concept of corporate personhood.This article reviews key findings in the Citizens United v. FEC case, then describes the historical, legal, and theoretical concepts of corporate personhood with the goal of unbundling the nuanced consequences of the majority and dissenting opinions of the Citizens United v. FEC case. The analysis then turns to a shareholder perspective, with particular emphasis on the implications for shareholders’ rights and responsibilities. It concludes with an exploration of options available to shareholders concerned about how to respond when a corporation uses its resources to communicate political opinions at odds with their own.

Disguised Contributions in the Channels of Corporate Political Spending

Widespread dissatisfaction with corporate participation in elections persists despite strict regulations. Exploiting within firm-cycle cross-candidate variation and across firm-cycle variation, we demonstrate that corporate spending on US elections exceeds disclosed campaign contributions. Firms constrained by existing campaign contribution limits spend an additional $549,000 on lobbying per election cycle, an amount more than 100 times the contribution limit. Constrained firms also have chief executives that contribute more to politicians and firm foundations that make larger philanthropic donations. While legally permitted, these expenditures may be interpreted by the public as corrupt disguised contributions according to the Supreme Court’s landmark Buckley v. Valeo decision.

Constitutionalizing Corporate Law

The Supreme Court has recently decided some of the most important and controversial cases involving the federal rights of corporations in over two hundred years of jurisprudence. In rulings ranging from corporate political spending to religious liberty rights, the Court has dramatically expanded the zone in which corporations can act free from regulation. This Article argues these decisions represent a doctrinal shift, even from previous cases granting rights to corporations. The modern corporate rights doctrine has put unprecedented weight on state corporate law to act as a mechanism for resolving disputes among corporate participants regarding the expressive and religious activity of business corporations. The result is a new reliance on state corporate law that gives a quasi-constitutional dimension to governance rules that were developed in a different era and with a different focus. The Article further illuminates the specific areas of mismatch between modern corporate rights doctrine and state corporate law. This examination offers two insights often overlooked in contemporary debate. First, it provides a deeper grounding for understanding where the Court has gone wrong and the importance of corporate governance proposals raised in the aftermath of its recent decisions. Second, the Article shows that the significance of the Court’s decision in Burwell v. Hobby Lobby Stores, Inc. extends beyond issues of women’s rights and sexual orientation, as is often emphasized. The decision undermines the very assumptions on which corporate law has been built: that private ordering and external regulations can be relied upon to address concerns that corporate law has been given a pass to ignore.

Corporate Democracy from Say on Pay to Say on Politics

The President of the Business Roundtable once infamously said that “corporations were never designed to be democracies…” American courts respectfully disagree and have repeatedly held that the democratic rights of shareholders are sacrosanct. The context for the Business Roundtable President’s comment was the battle over say on pay — a battle the Business Roundtable lost in the United States with the passage of the financial reform legislation known as Dodd-Frank. As I will explain in this piece, courts’ robust conception of corporate democracy rights for shareholders should protect both shareholders’ ability to have a say on pay and say on politics. Say on pay is the practice in United States, among other nations, of mandating a non-binding shareholder vote on executive compensation at publicly traded firms. A shareholders’ say on politics does not yet exist in America. But theoretically, just as say on pay mandates shareholder democracy in the case of executive remuneration, say on politics would require shareholders to vote on corporate political spending. Binding say on politics votes already exist in the U.K. Critiques of say on pay and say on politics have been couched as constitutional objections based on either the Tenth or First Amendments of the U.S. Constitution. But at their heart, these objections seem less rooted in the text of the Constitution and more inspired by a cribbed conception of shareholders’ corporate voting rights. To untangle who has the stronger legal argument requires a review of how American courts have conceptualized “corporate democracy.” I conclude that as framed by key courts such as the U.S. Supreme Court, the D.C. Circuit Court of Appeals and the Delaware state courts, “corporate democracy” is a capacious enough concept to justify both shareholders’ say on pay and say on politics.

How Corporate Political Spending Strains the Limits of the Business Judgment Rule

A number of agency issues arise when a corporation chooses to exercise its freedom of speech by making donations to a super PAC or other political organization. This article draws a distinction between contributions designed to influence legislation and regulation of the corporation and political donations that corporations justify as goodwill or community outreach. Analyzing the issue with an emphasis on the duty of loyalty, the article argues that much corporate political spending cannot really be understood as a business decision that should enjoy the protection of the business judgment rule. It also reflects on the Supreme Court’s recent decision in Hobby Lobby to illuminate the nature of much corporate political spending. The article concludes that greater scrutiny of corporate political donations under the law of fiduciary duties will have two positive benefits: 1. it will prevent spending that is designed to enrich the corporate decision makers themselves; and 2. it will shine more light on spending that helps advance a corporation’s own interests at the expense of the public good.

The Worst Test of Truth: The 'Marketplace of Ideas' as Faulty Metaphor

Dissenting in Abrams v. United States, Justice Holmes proclaimed that “the best test of truth is the power of the thought to get itself accepted in the competition of the market.” Economic markets have since become a pervasive metaphor for free speech. This Article critiques the basic argument that underlies this metaphor: that speech should be “free” because markets are “free,” and because free markets produce “truth.” These assertions about markets are taken for granted, but they portray markets and market regulation inaccurately. Economic markets thus provide a poor analogy for the deregulation of speech. First Amendment jurisprudence invokes the supposed truth-finding function of markets to argue that competition, not law, should distinguish the true from the false. Thus, the law should also refrain from attempting to equalize the relative strength of competing speakers. The Supreme Court relied on the “anti-equalizing” principle — and the marketplace metaphor — to strike down restrictions on corporate political spending in Citizens United v. Federal Election Commission (2010). The assumptions of the metaphor are inconsistent with theory and experience, however. Economic markets do not produce normative or empirical “truth.” Existing regulatory law reflects this understanding. Mail fraud law and securities regulation, for example, assume that markets are particularly bad at identifying the truth, and thus information is more aggressively regulated in the market context than in other contexts. Economic regulation also assumes that markets require some degree of “equalizing.” Antitrust law and insider-trading law, for example, treat certain types of advantages as impediments that must be corrected in order to ensure that markets remain competitive. The marketplace metaphor has proven effective in defending unpopular speech. It has also (perhaps inadvertently) contributed to the general pervasiveness of free-market rhetoric and ideology in legal discourse. But the metaphor is based on a normative vision of unregulated markets, and not on market theory or experience. Thus it is ultimately little more than an antiregulatory assertion that provides no insights into how the law should deal with speech or markets.

The effects of campaign finance spending bans on electoral outcomes: Evidence from the states about the potential impact of Citizens United v. FEC

This paper seeks to understand the effect of campaign finance laws on electoral outcomes. Spurred by the recent Supreme Court decision, Citizens United v. Federal Election Commission (2010), which eliminated bans on corporate and union political spending, the study focuses on whether such bans generate electoral outcomes that are notably different from an electoral system that lacks such bans. We look to two key electoral dynamics that such bans might influence: the partisan balance of power and the success of incumbents. Using historical data on regulations in 49 American states between 1968 and 2009 we test alternative models for evaluating the impact of corporate spending bans put in place during this period. The results indicate that spending bans appear to have limited effects on election outcomes.

The SEC and Dark Political Money: An Historical Argument for Requiring Disclosure

In traveling across the country to talk about the impact of the Supreme Court’s 2010 decision in Citizens United, I frequently encounter resistance from audiences when I suggest that the Securities and Exchange Commission (“SEC” or the “Commission”) has a vital role to play in providing greater clarity about corporate money in the American political process. One version of this objection is: “you’re asking the wrong thing of the wrong agency.” This paper is meant to provide a fulsome explanation about why the SEC should continue its leadership in fighting pay-to-play corruption by requiring transparency of corporate political spending across the board.Some may think regulating money in politics is outside the SEC’s wheelhouse. But this is a mistaken view. Contrary to common misconceptions, securities regulators had to grapple with the problem of corporate money in politics four decades before Citizens United. In actuality, the SEC has been sitting at the nexus of campaign finance law and corporate securities law since the mid-1970s. In addressing this issue, I first explore the investigations conducted by the SEC of public companies following the Watergate scandal, which revealed that corporate treasury funds had been given to President Richard Nixon’s 1972 reelection campaign. The SEC found that the money that went to Nixon’s campaign was just the tip of the iceberg. The SEC discovered that hundreds of American companies had made political payments to both political parties in American elections as well as significant payments to politicians abroad, much of these political payments were made secretly in ways that hid them from investors. Following this discovery, the SEC was instrumental in pushing Congress to pass the Foreign Corrupt Practices Act to require more corporate transparency as well as to outlaw bribery of foreign officials by US businesses.The next major intervention of the SEC into the regulation of money in politics came in the 1990s when SEC Chair Arthur Levitt made fighting pay to play in the municipal bond market a top priority for the Commission. The SEC found that contracts to underwrite municipal bonds were often being awarded to those investment companies that had given sizable campaign contributions to state and local elected officials. Many investment companies, it appeared, were “paying to play” in the profitable municipal bonds market – essentially, rigging the awarding of government contracts. To stop this practice, the SEC through the Municipal Securities Rulemaking Board (MSRB) promulgated Rule G-37 to clamp down on pay-to-play corruption. Finally in 2010, after a string of further embarrassments in the public pension fund market sent numerous elected officials to jail for kickback schemes, the SEC acted again to curb pay to play in this market as well. This time the SEC promulgated Rule 206(4)-5, which restricts the amount of campaign money investment advisers can give to public officials in charge of investments for public pensions. This piece argues that just as the SEC acted in these three previous cases to prevent corruption in the capital markets whether the source was foreign or domestic, federal state or local, the Commission likewise has a duty to step up to the plate to provide sensible new rules for corporate political spending again post-Citizens United. Citizens United is the Supreme Court case from 2010 which allow corporations to spend an unlimited amount of money in state and federal American elections. Already, millions of dollars that can be traced from publicly traded companies has been spent in the 2010 and 2012 federal and state elections. Unfortunately, there are hundreds of millions of dollars being spent in the federal election alone that cannot be traced. Investors and voters are left in the dark about how much of this money is from public companies.This new era of corporate political spending raises a similar problem of transparency for investors as the previous three cases and threatens the integrity of our capital markets. This is why the SEC should act on Petition No. 4-637 to establish clarity of how much money is being spent by public companies for exactly which political causes, candidates and parties.