Corporate Political Contributions: Investment or Agency?
We examine corporate contributions to political candidates in national level elections in the United States from 1991 to 2004. We find that firms that donate have poor operating characteristics and that donations are negatively correlated with future excess returns. An increase in donations of $10,000 is associated with a reduction in excess returns of 7.7 basis points. When we instrument for donations,we find an even stronger negative association between donations and returns. We find that worse corporate governance is associated with larger donations and,through its impact on donations,leads to worse excess returns. When we try to isolate instances in which donations may lead to better returns,we find no support for the hypothesis that political donations represent an investment in political capital. Taken together,our results suggest that political donations are symptomatic of an agency problem.
Rajesh K.Aggarwal Felix Meschke Tracy Wang
Carlson School of Management University of Minnesota 321 19th Avenue South,Room 3-122 Minneapolis,MN 55455
国际会议
成都
英文
2007-07-09（万方平台首次上网日期，不代表论文的发表时间）