Political Action Committee Contributions Research Articles

To Toe the Party Line? The Impact of Firm and CEO Partisanship on Corporate Mass-Media Normative Legitimacy

Corporate political activity (CPA) research has traditionally focused on instrumental and strategic value, explicitly ignoring how external stakeholders, specifically the public, view the legitimacy implications of CPA, in particular with regard to partisan forms of CPA. Yet, recent research has begun introducing normative considerations into CPA, highlighting the impact of public evaluations on CPA, and partisan CPA, in particular. Focusing on normative affective legitimacy, as proxied by the tone of mass-media reporting rhetoric, this study explores the effect of firm and CEO partisan political contributions on corporate affective legitimacy. Utilizing three types of dynamic panel data analyses on S&P 500 firms over 20 years, the study provides consistent evidence that both firm-level and CEO-level partisan political action committee contributions are negatively associated with affective-based corporate legitimacy. Post hoc analyses reveal that in response to affective-legitimacy evaluations, firms reduce firm-level partisan political contributions and lobbying expenditures, but not other forms of CPA or partisan CPA. The study also finds that state-level public political polarization moderates the association between CEO partisan contributions and firms’ affective-legitimacy evaluations. This study is the first to systematically document the negative normative impact of CPA and partisan CPA. It strongly informs CPA theory and has practical implications for executives’ use of partisan CPA.

Commentary: On theory, data, and interpreting results in political CSR research: Reflecting on “Do firms put their money where their mouth is? Sociopolitical claims and corporate political activity”

In examining whether firms align their sociopolitical claims with their corporate political activities (CPA), Preuss and Max (2023) tackle a topic of keen interest to the Accounting, Organizations and Society (AOS), corporate social responsibility (CSR), and broader interdisciplinary accounting research communities. They document partial alignment between firms' diversity and environmental claims and the voting records of U.S. Congress members they financially support through political action committee (PAC) contributions, but also report several important caveats. Given that firm strategies on CSR and CPA often are played on ‘two (different) chessboards’ (Den Hond, Rehbein, de Bakker, & Lankveld, 2014), a study such as theirs is difficult to accomplish successfully. I applaud their efforts and believe the objective of their study was met. In my commentary, I use their study as a springboard to discuss key considerations regarding theory, data, and the interpretation of results when performing political CSR research in accounting.

Do firms put their money where their mouth is? Sociopolitical claims and corporate political activity

Firms increasingly respond to stakeholder demands by making public claims about their stances on polarizing issues, but at the same time their political activities may contradict their claims. We analyze the extent to which firms' sociopolitical claims and their political action committee contributions align. We develop a dictionary of claims related to diversity and environmental protection based on word combinations in firm communications and link firms' political contributions to candidate approval ratings provided by third-party advocacy groups. While firms generally donate mostly to lower-rated politicians (i.e., those with lower environmental and human rights ratings), firms making more sociopolitical claims donate relatively more to higher-rated politicians. The latter is consistent with political alignment but also has further limit: While firms with more claims donate more to higher-rated politicians, they donate no less to lower-rated politicians. Moreover, government subsidies, politicians’ power, and community pressure for diversity and environmental disclosures reduce political alignment.

An Analysis of Political Contributions by Urologists in the United States: 2003-2022.

We sought to better understand the amounts and distribution of political contributions made by urologists in the United States. The Federal Election Commission was analyzed for political contributions from 2003 to 2022 using the search terms "urology," "urologist," or "urologic surgeon." Contributions were classified by political party (Democratic, Republican, or Independent) and were analyzed for temporal, geographic, and demographic trends. There were a total of 26,441 unique contributions that resulted in $9,943,205 after adjusting for inflation. The total amount of political contributions increased significantly over time, with higher numbers during presidential election years. The Republican party received the highest proportion of donations (69.1%). Importantly, women urologists and urologists working in academic centers were significantly more likely to contribute to Democratic committees (P < .001 for both). Texas had the highest total amount of contributions ($395,152). Overall contributions to urology political action committees have steadily decreased since 2011, while contributions to individual campaigns and nonurology political action committees have increased. Urologists have been increasingly contributing to political campaigns over the past 19 years, with most of their individual and political action committee contributions going to Republican committees and candidates. Future research evaluating how growing political engagement by urologists affects the development of new health care policy will be important as a new generation of urologists begins to enter practice.

Value of corporate political contributions from the investors’ perspective

In this study we consider corporate political contributions as a special type of social capital reserved for future contingencies. Firms benefit from making such contributions when the government suddenly intervenes in the market. We explore this value-creation mechanism in terms of the firm-investor relationship, not in terms of the traditional firm-government relationship. When a government intervention is being proposed or approved, firms that have made political contributions coordinating with political candidates are likely to enjoy better stock market returns than those that have not made such contributions. We also argue that firms that have made political contributions may experience lower stock returns than those that have not when the intervention plan is rejected. By focusing on the U.S. government’s Troubled Asset Relief Program (TARP) of 2008, our event study analysis with three news announcements finds that financial institutions that made political action committee (PAC) contributions indeed enjoyed higher stock returns when TARP was proposed and eventually approved. However, we do not find support for the investors’ devaluation of political contributions when TARP was once rejected during the review process. The findings propose that managers can use corporate political contributions as a strategic option to help investors reduce investment uncertainty by presenting their readiness for any unexpected change in the regulatory environment.

Geopolitical risk and corporate investment: How do politically connected firms respond?

This letter reveals how political connection affects the relationship between geopolitical risk (GPR) and corporate investment. Using a large sample of U.S. firms from 1996 to 2018, we examine if political connection moderates the negative effect of GPR on corporate investments. Our analysis finds that politically connected firms can mitigate this negative relationship. Firms that make political action committee (PAC) contributions and lobby members of Congress invest more than their non-politically connected competitors. These results remain valid through a combination of robustness analyses.

Patterns of Campaign Finance in Pennsylvania's 1982 Legislative Election

This paper analyzes sources of contributions to virtually all candidates for Pennsylvania legislative office in 1982 who reported raising or spending more than $250 in any of six reporting periods. Contributions totaling nearly $7,750,000 were examined. Almost half came in amounts greater than $250. About 20% came from contributions of $50 or less from individuals: an equal proportion came from individuals giving between $50 and $250. Political Action Committee contributions received special scrutiny. About 27% of all money raised came from PACs, split evenly between Republicans and Democrats. But PAC money heavily favored incumbents by a three to one margin. In sharp contrast to political party contributions, PACs gave almost as much to candidates assured of victory or even unopposed as to those in close races. Labor PACs gave about as much as professional PACs, but were outspent two to one by business PACs. Overall, PACs accounted for nearly 37% of incumbents' receipts, suggesting their role is greater than in U.S. Congressional elections.

Perceptions of political Self‐Dealing? An empirical investigation of market returns surrounding the disclosure of politician stock purchases

AbstractResearch summaryWe investigate how congressional stock purchases may impact investor expectations of firm outcomes. Specifically, we argue that because there is information asymmetry regarding how public policy may impact a firm and investors perceive that members of the U.S. Congress possess insider governmental information and power over the regulatory landscape of a firm, a legislator's purchase of firm stock will generate abnormal returns. Furthermore, we argue that this response will be greater if the Congressperson has jurisdiction over the firm through committee assignments, and that the effect of jurisdiction will be strongest when the firm ties itself directly to the politician through political strategies (e.g., lobbying sponsored legislation, committee testimony, and political action committee contributions). We find support for many of our arguments in a broad sample of senator stock purchases between 2012 and 2020.Managerial summaryWe examine stock purchases of the members of the U.S. Senate for years 2012–2020 and find that stock purchases by senate members generate abnormal returns. We also find that abnormal returns are higher if the senator has direct jurisdiction over the firm through committee assignments. We see an increase in abnormal returns if the firm is tied to the member of the U.S. Senate through lobbying‐sponsored legislation and political action committee contributions. We also find that stocks both purchased and sold by senators experience negative abnormal returns over the 6–12 months following the transaction date. Our study provides insights into important public policy questions related to transparency and ethics in government and speaks to the question of investments by public servants.

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 effects of firm political contributions on earmarks and subsequent firm performance

With the reintroduction of hard earmarks in the United States, it is essential to understand the factors that drive the receipt of earmarks. Earmarks represent a significant source of revenue for many firms. We examine the relationship between political expenditures, federal earmarks, and subsequent firm performance. Using a sample of earmarks from appropriations bills, we demonstrate that firm-affiliated political action committee (PAC) contributions to legislators predict the size and number of earmarks directed to these companies. We also show that PAC contributions to a legislator increase the probability of the legislator writing an earmark benefiting the firm, with an average return of 1090%. Earmarks are associated with greater future profitability, but politically connected earmark recipients exhibit poorer financial performance. Our findings indicate a clear channel through which firms receive value from the US federal government.

Corporate lobbying and the value of firms: The case of defense firms and the 9/11 terrorist attacks

AbstractWe examine the stock prices of defense firms surrounding the reopening of markets after the September 11, 2001 terrorist attacks. The cumulative abnormal returns for defense firms increased dramatically in response to the attacks, which is arguably explained by the expectation of impending military conflict and the possibility of new defense spending. Perhaps more interestingly, a substantial amount of the variation in the price response across defense firms is driven by whether or not the firm had established political connections through lobbying activities or political action committee contributions before the attacks. These findings seem to support the notion that market participants perceived that defense firms with political connections were more likely to secure future military contracts.

The Impact of Political Advocacy on the Plastic Surgeon: A Data-Driven Analysis.

Despite successful legislative efforts by the American Society of Plastic Surgeons (ASPS), the Plastic Surgery Political Action Committee remains underused. Participation in advocacy and financial contributions of ASPS members fall below those of similar surgical subspecialties. This study aims to perform a data-driven investigation into the impact of Plastic Surgery Political Action Committee efforts on the practicing plastic surgeon. A retrospective review of the ASPS procedural database from 1992 to 2018 and Plastic Surgery Political Action Committee contributions from 2012 to 2018 was performed. Postmastectomy breast and congenital anomaly reconstructions were analyzed. To determine significant variations in trends, change-point analyses were conducted. Changes in surgical volume were correlated to implementation of federal legislative efforts. Three significant trends of increased breast reconstruction volume were detected with associations to three specific legislative changes: 1992 to 1998, which correlates with the Women's Health and Cancer Rights Act; 2006 to 2009, which correlates with the U.S. Food and Drug Administration's approval of silicone breast implant use; and 2013 to 2015, which correlates with the Breast Cancer Patient Education Act. During the study period, breast reconstruction procedures increased substantially compared with all reconstructive procedures (146.6 percent versus 3.6 percent). There were no significant trends detected for birth defect reconstructions. Although contributions were relatively stagnant, resident member contributions increased after 2015, correlating with formation of the Political Action Committee's Resident's Club. This study demonstrates a correlation in timing between Plastic Surgery Political Action Committee legislative accomplishments and the resulting case volume increase in some areas of plastic surgery. The data highlight the importance of political advocacy and how political action committee activities can directly impact patient access to care and the practice of plastic surgery.

Direct Democracy, Corporate Political Strategy, and Firm Value

We analyze a novel data set of corporate contributions to ballot initiatives and referendums at the U.S. state level between 2003 and 2018. Ballot initiatives and referendums allow citizens of 26 U.S. states to vote directly on legislation. Firms make significant campaign contributions to ballot measure committees in favor of or against specific initiatives that exceed on average their political action committee contributions. Firms that contribute to successful (failed) direct initiated state initiatives generate positive (negative) CARs of 0.32% (-0.21%) on average around the election. They also experience significant sales growth in the two years surrounding successful ballot measure campaigns.

Tax-Exempt Lobbying: Corporate Philanthropy as a Tool for Political Influence

We explore the role of charitable giving as a means of political influence. For philanthropic foundations associated with large US corporations, we present three different identification strategies that consistently point to the use of corporate social responsibility in ways that parallel the strategic use of political action committee (PAC) spending. Our estimates imply that 6.3 percent of corporate charitable giving may be politically motivated, an amount 2.5 times larger than annual PAC contributions and 35 percent of federal lobbying. Absent of disclosure requirements, charitable giving may be a form of corporate political influence undetected by voters and subsidized by taxpayers. (JEL D22, D64, D72, L31)

Citizens United vs. FEC and corporate political activism

This paper analyzes the effect that the U.S. Supreme Court's landmark decision on Citizens United vs. FEC had on corporate political activism. The decision opened the door for corporate treasuries to engage in independent political spending. Politically connected firms have lower announcement returns at the ruling than non-connected firms. The estimates suggest that the value of a political connection decreases by $6.9 million. To evaluate the effect of Citizens United on corporate political activism, we explore the fact that Citizens United also lifts bans on independent political spending in states where such bans existed. After the ruling, firms headquartered in states where bans are lifted have fewer state-level connections relative to firms in other states. Overall, our evidence supports the hypothesis that independent political spending crowds out political connections. We do not find any significant crowding-out effects of independent political expenditures on lobbying activity, executive contributions, and political action committees (PAC) contributions.

CEO characteristics, firm performance, and corporate political contributions

AbstractWe investigate if CEO characteristics determine the choice of Political Action Committee (PAC) contributions by firms and if such participation leads to better firm performance. Using a unique, hand‐collected database, we also focus on the identity of the politicians receiving PAC contributions to examine the impact of the value‐relevance of such contributions. Examining data on corporate contributions made to candidates seeking federal office during the 2002, 2004, and 2006 election cycles, we find that CEO dominance and interest alignment influence strategic choices of firms with regards to establishing PACs. Our analysis of value‐relevant contributions shows that firms prefer to donate to politicians representing the state of a firm's headquarters, validating the truth to the adage that all politics is local. However, these targeted political contributions do not have a discernible impact on firm performance.

Firearm Policy: Physician Organizations' Role in Political Action Committee Funds, 2018.

Objectives. To compare donations to individual politicians from physician organization political action committees (PACs) and from the National Rifle Association Political Victory Fund (NRA PVF) in 2018.Methods. We identified 7 organizations with published firearm injury prevention policy. We determined the difference in funds received from physician organization PACs and the NRA PVF for each congressmember. We examined their voting records on firearm-related legislation.Results. A total of 141 congressmembers received funds from both physician organization PACs and the NRA PVF. Of these, 99.3% voted for legislation not consistent with organization recommendations. The majority (70.2%) received more funds from the combined physician organization PACs than from the NRA PVF.Conclusions. Physician organization PACs have a financial impact on NRA-backed congressmembers. They currently contribute to politicians with voting records inconsistent with their own policy recommendations. Firearm violence prevention does not currently outweigh other legislative priorities for physician organization PAC contributions.

Gun Violence and Mental Illness: It’s Time to Change the Status Quo

Gun Violence and Mental Illness: It’s Time to Change the Status Quo

Association of Physician Organization–Affiliated Political Action Committee Contributions With US House of Representatives and Senate Candidates’ Stances on Firearm Regulation

Many physician professional organizations have endorsed public policies, such as expanded background checks, to reduce firearm-related injury. It is not known whether physician organizations' political giving aligns with these policy endorsements. To compare physician organization-affiliated political action committee (PAC) campaign contributions with US House of Representatives and Senate candidates' stances on firearm safety policies and analyze whether physician organization endorsement of firearm safety policies is associated with contribution patterns. This cross-sectional study compared contributions from the 25 largest physician organization-affiliated PACs during the 2016 election cycle (January 1, 2014, to December 31, 2016) with US House of Representatives and Senate candidate support for firearm regulation. Physician organization endorsement of firearm safety policies was defined by endorsement of the 2015 Firearm-Related Injury and Death in the United States: A Call to Action From 8 Health Professional Organizations and the American Bar Association. Contributions to US House of Representatives and Senate candidates by stance on firearm safety legislation measured by (1) voting history on US Senate Amendment (SA) 4750, which proposed background check expansion; (2) cosponsorship of US House Resolution (HR) 1217, which sought to expand background checks and strengthen the national criminal background check system; and (3) an A rating (vs not A) by the National Rifle Association Political Victory Fund (NRA-PVF), a measure of overall candidate support for firearm regulation. This study examined the 25 largest physician organization-affiliated PACs during the 2016 election cycle. Twenty of 25 PACs (80%) contributed more in total to incumbent Senate candidates who voted against SA 4750 (n = 21) than to those who voted for it (n = 8), and 24 of 25 PACs (96%) contributed more in total to incumbent US House of Representatives candidates who did not cosponsor HR 1217 (n = 227) than to those who cosponsored it (n = 166). A total of 21 of 25 PACs (84%) contributed more total dollars to US House of Representatives and Senate candidates rated A by the NRA-PVF (n = 386) than to those not rated A (n = 546). Twenty-four of 25 PACs (96%) contributed to a greater proportion of candidates rated A by the NRA-PVF than candidates not rated A. Among PACs whose affiliated organizations endorsed the Call to Action, 8 of 9 (89%) supported a greater proportion of candidates rated A by the NRA-PVF than candidates not rated A, whereas 16 of 16 PACs affiliated with nonendorsing organizations supported a greater proportion of candidates rated A by the NRA-PVF. After adjustment for other political factors, the 9 PACs that endorsed the Call to Action had a lower likelihood of donating to NRA-PVF A-rated candidates compared with PACs that did not endorse the Call to Action (odds ratio, 0.76; 95% CI, 0.58-0.99; P = .04). Physician organization-affiliated PACs included in this study donated more funds to more US House of Representatives and Senate candidates who oppose firearm safety policies than to candidates in support of such policies. Although endorsement of the Call to Action was associated with a lower likelihood of donating to candidates who oppose firearm safety policies, the overall pattern was not consistent with professional societies' advocacy for firearm safety.

Lobbying and Opposition to SFAS No. 123(R): An Examination of Campaign Contributions from CEOs and PACs

SYNOPSISWe examine the contributions of CEOs and company-affiliated political action committees (PACs) to members of Congress who supported a moratorium on the Financial Accounting Standards Board's 2003 proposed standard to require firms to expense stock-based compensation at fair value. Our evidence—based on a sample of firms targeted by shareholder proposals to voluntarily expense employee stock options—indicates that CEOs and PACs had different motivations for lobbying on this policy issue. Specifically, we find that opposition to shareholder proposals varies positively with CEOs' contributions to the moratorium co-sponsors. However, opposition varies positively with PAC contributions to co-sponsors only when the targeted CEO contributes to the PAC. These results suggest that CEO lobbying relates more to executives' interests to preserve excessive pay, whereas PAC lobbying relates more to interests in preserving the level of earnings.