Sunday, September 16, 2012
Shining Light on Corporate Political Spending, by Lucian A. Bebchuk, Harvard Law School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI), and Robert J. Jackson Jr., Columbia Law School, was recently posted on SSRN. Here is the abstract:
This Article puts forward the case for SEC rules requiring public companies to disclose their political spending. We present empirical evidence indicating that a substantial amount of corporate spending on politics occurs under investors’ radar screens and that shareholders have significant interest in receiving information about such spending. We argue that disclosure of corporate political spending is necessary to ensure that such spending is consistent with shareholder interests. We discuss the emergence of voluntary disclosure practices in this area, and show why voluntary disclosure is not a substitute for SEC rules. We also provide a framework for the SEC’s design of these rules. Finally, we consider and respond to the wide range of objections that have been raised to disclosure rules of this kind. We conclude that the case for such rules is strong, and that the SEC should promptly develop disclosure rules in this area.