Political Spending and Shareholder Wealth: The Effect of the U.S. Supreme Court Ruling in Citizens United

We examine the impact of the Citizens United decision on firm value. While the value of U.S. firms do not respond significantly to the Citizens United decision on average, we find evidence that firms in industries subject to more extensive regulation react significantly and positively to the announc...

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Bibliographic Details
Published in:American politics research 2014-07, Vol.42 (4), p.579-599
Main Authors: Burns, Natasha, Jindra, Jan
Format: Article
Language:English
Subjects:
Citizens
Corporations
Courts
Expenditures
Firm value
Law
Political finance
Regulation
State laws
Stockholders
Supreme Court
Supreme Court decisions
Supreme Courts
U.S.A
Wealth
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Summary:We examine the impact of the Citizens United decision on firm value. While the value of U.S. firms do not respond significantly to the Citizens United decision on average, we find evidence that firms in industries subject to more extensive regulation react significantly and positively to the announcement. We also find evidence consistent with Justice John Paul Stevens’ argument that the Court decision will affect state laws. Specifically, our results indicate that firms that are headquartered in states with more stringent limits on political spending by corporations respond positively to the announcement.
ISSN:1532-673X
1552-3373
DOI:10.1177/1532673X13508976