Corporate Political Contributions and Stock Returns


  • Cooper is with the David Eccles School of Business, The University of Utah. Gulen is with the Krannert School of Management, Purdue University. Ovtchinnikov is with the Owen Graduate School of Management, Vanderbilt University. Ovtchinnikov gratefully acknowledges financial support from the 2006 Pamplin Summer Research Grant and the Financial Markets Research Center. We thank Julian Atanassov, Hank Bessembinder, Al Carrion, John Chalmers, Mike Cliff, Don Cooper, Doug Eckel, Mara Faccio, Laura Frieder, Roberto Gutierrez, E. Han Kim, Madhuparna Kolay, Michael Lemmon, Uri Loewenstein, Jennifer McConnell, John McConnell, Wayne Mikkelson, Mike Munger, Raghu Rau, Jonathan Reuter, Scott Schaefer, Jim Snyder, Thomas Stratmann, two anonymous referees, the Editor (Cam Harvey), and seminar participants at Brigham Young University, Goldman Sachs, University of Oregon, The Q-Group fall seminar, and Vanderbilt University for their helpful comments. We thank Gokhan Sonaer for research assistant work.


We develop a new and comprehensive database of firm-level contributions to U.S. political campaigns from 1979 to 2004. We construct variables that measure the extent of firm support for candidates. We find that these measures are positively and significantly correlated with the cross-section of future returns. The effect is strongest for firms that support a greater number of candidates that hold office in the same state that the firm is based. In addition, there are stronger effects for firms whose contributions are slanted toward House candidates and Democrats.