Supreme Court in 2010 (Citizens United, 558 U.S. Over the past decade, corporate political spending in the United States (U.S.) has increased substantially, 1 particularly following the overturning of corporate spending restrictions by the U.S. Together, these results are consistent with the view that voluntary political spending disclosure helps align managers’ interests with those of shareholders.Ĭorporate entities are important participants in the political process and many large public companies spend significant amounts of shareholder resources on political causes. Finally, we find that political spending disclosure enhances the positive relationship between annual corporate political spending and firm financial performance.
The level of political spending disclosure is also associated with a higher analyst following, lower forecast error, and smaller forecast dispersion. 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. 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. 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. In this paper, we study voluntary political spending disclosure, a widespread yet relatively unexplored corporate voluntary disclosure practice.