The 2012 election is over, and a lot of money was spent. Individuals ponied up hundreds of millions of dollars between the two presidential candidates, as did corporations.
At the end of the day, what did businesses get for all the millions spent on political jockeying? More importantly, what did shareholders get from the corporate campaign spending?
One thing shareholders didn't get was disclosure on the amount spent on politics. Corporations are not required to disclose campaign spending, but in September, a paper by Harvard professor Lucian A. Bebchuk and Robert J. Jackson, Jr., a professor at Columbia University, made the case that shareholders deserve that information, and the Securities Exchange Commission, or SEC, should require it.
Here are some of the arguments.
Corporations can give unlimited and untraceable sums of money to intermediaries who are also not required to disclose the source or amount of donations. Some of the intermediaries include the Chamber of Commerce, the Business Roundtable, American Health Insurance Plans and the American Petroleum Institute.
From the paper, "Shining light on corporate political spending":
Even a determined individual shareholder willing to collect all available public information on a company’s political spending would be unable to measure any spending through these intermediaries.
Corporations can spend money on candidates indirectly through advertising. They are required to make the amounts spent available in the public domain, but the information is not in one place, and it requires significant effort for an individual to scrape all of the information together.
These rules, however, are designed to provide the public with information about the funding sources for particular politicians -- not to allow investors to assess whether public companies are using shareholder money to advance political causes.
Shareholders want the information.
During the 2012 proxy season, out of the 544 shareholder proposals appearing on public-company proxy statements, 71 related to political spending. Thus, 13 percent of all proposals that appeared on public-company proxy statements in 2012 were related to political spending. Further, proposals on political spending were more common than proposals on any other topic.
In February, SEC commissioner Luis Aguilar stated that companies should report political spending, Bloomberg reported.
What do you think, should public companies disclose how they spend investor money? Would political spending influence your investment decisions?
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