Shareholder Activism and Political Spending
University of Waterloo
Date: November 22, 2013
Time: 10:30 am - 12:00 pm
Location: Room 046
We examine the determinants and consequences of shareholder activism around political spending. Using a comprehensive sample of political spending-related shareholder proposals submitted between 2004 and 2012, we examine determinants of the targeting decision, factors affecting voting outcomes, and implementation rates for and market reaction to initiation of new political spending policies. Proposals calling for enhanced disclosure of spending information are most prevalent and garner the most votes relative to proposals for information on spending philosophy or those that aim to give shareholders a say on political spending. We find that 20% of the proposals are subsequently adopted, a rate that is very high relative to previous studies on shareholder proposals. Further, we find that while some activists, namely unions and pension funds, appear to target firms for private interests, voting patterns and market reaction to implementation decisions reflect a more sophisticated understanding of corporate political spending and an ability to filter out opportunism on the part of activist and/or management. Our findings contribute to the ongoing debate about the role of disclosure and shareholder voice in an era where firms face fewer restrictions in directing corporate funds towards political spending.