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Corporate Politics, Governance, and Value Before and After Citizens United


  • John C. Coates IV

  • I extend thanks for comments and discussions on this and related papers to Dick Fallon, Frank Michelman, Rick Pildes, Noah Feldman, Jesse Fried, Heather Gerken, Jeffrey Drope, Andrew Metrick, Josh Fischman, Lucian Bebchuk, Ciara Torres-Spelliscy, Richard Briffault, Darius Palia, Semi Kedia, Mihir Desai, Nell Minow, Barak Orbach, Taylor Lincoln, Charles Fried, participants in workshops at Harvard, Boston College, Columbia, Georgetown, University of Virginia, New York University, Wake Forest, Boston University, the Brennan Center, and the Conference on Empirical Legal Studies, and three anonymous reviewers. Jin-Hyuk Kim graciously provided data on corporate political activity, David Yermack and GMI graciously provided data on corporate jet use by CEOs, and Gail Tan, Ashton Kingsman, Katherine Petti, Alex Trepp, Amanda Vaughn, and Jason George provided excellent research assistance. All errors are mine; all rights are reserved.

John F. Cogan, Jr. Professor of Law and Economics, Harvard Law School; email:


How did corporate politics, governance, and value relate to each other in the S&P 500 before and after Citizens United? In regulated and government-dependent industries, politics is nearly universal, and uncorrelated with shareholder power, agency costs, or value. However, 11 percent of CEOs in 2000 who retired by 2011 obtained political positions after retiring and, in most industries, political activity correlates negatively with measures of shareholder power, positively with signs of agency costs, and negatively with shareholder value. The politics-value relationship interacts with capital expenditures, and is stronger in regressions with firm and time fixed effects, which absorb many omitted variables. After the shock of Citizens United, corporate lobbying and PAC activity jumped, in both frequency and amount, and firms politically active in 2008 had lower value in 2010 than other firms, consistent with politics at least partly causing and not merely correlating with lower value. Overall, the results are inconsistent with politics generally serving shareholder interests, and support proposals to require disclosure of political activity to shareholders.