Risky Business: Do Disclosure and Shareholder Approval of Corporate Political Contributions Affect Firm Performance?
Business and PoliticsSaumya Prabhat and David M. Primo
2018
The role of corporations in the US political process has received increased scrutiny in the wake of the US Supreme Court’s Citizens United decision, leading to calls for greater regulation. In this paper, we analyze whether policies mandating greater disclosure and shareholder approval of political contributions reduce risk and increase firm value, as proponents of such rules claim. Specifically, we examine the Neill Committee Report (NCR), which led to the passage of the United Kingdom’s Political Parties, Elections, and Referendums Act 2000 mandating new disclosure and shareholder approval rules. We find that politically active firms did not benefit from the NCR in the days after its release and suffered a decline in value in the months and years that followed. Politically active firms also suffered an increase in risk, as proxied by stock return volatility, following the release of the NCR. We theorize that these findings are due to the reduced flexibility these rules impose on corporate strategy as well as the potential for these rules to facilitate political activism against corporations.
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Policy dynamics and electoral uncertainty in the appointments process
Journal of Theoretical PoliticsJinhee Jo, David M Primo, Yoji Sekiya,
2016
By incorporating electoral uncertainty and policy dynamics into three two-period models of the appointments process, we show that gridlock may not always occur under divided government, contrary to the findings of static one-shot appointments models. In these cases, contrary to the ally principle familiar to students of bureaucratic politics, the president or the confirmer is willing to move the court away from his or her ideal point as a way to insulate against worse outcomes in period two. By demonstrating how a simple set of changes to a workhorse model can change equilibrium outcomes significantly, this paper provides a foundation for reconsidering the static approach to studying political appointments.
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Using Item Response Theory to Improve Measurement in Strategic Management Research: an Application to Corporate Social Responsibility
Strategic Management JournalRobert J. Carroll, David M. Primo, Brian K. Richter
2016
This article uses item response theory (IRT) to advance strategic management research, focusing on an application to corporate social responsibility (CSR). IRT explicitly models firms’ and individuals’ observable actions in order to measure unobserved, latent characteristics. IRT models have helped researchers improve measures in numerous disciplines. To demonstrate their potential in strategic management, we show how the method improves on a key measure of corporate social responsibility and corporate social performance (CSP), the KLD Index, by creating what we term D-SOCIAL-KLD scores, and associated estimates of their accuracy, from the underlying data. We show, for instance, that firms such as Apple may not be as “good” as previously thought, while firms such as Walmart may perform better than typically believed. We also show that the D-SOCIAL-KLD measure outperforms the KLD Index and factor analysis in predicting new CSR-related activity.
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State Constitutions and Fiscal Policy
MERCATUS RESEARCHDavid Primo
This paper proposes a framework for studying the relationship between fiscal policy and state constitutions in terms of direct and indirect fiscal restraints and pressures.
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Disclosing Disclosure: Lessons from a “Failed” Field Experiment
The Forum: A Journal of Applied Research in Contemporary PoliticsDavid Primo, Dick M. Carpenter II, Pavel Tendetnik, and Sandy Ho
In a recent issue of The Forum, Fortier and Malbin call for more research into the effects of disclosure requirements for campaign finance. In this paper, we report the results of a field experiment designed to assess whether such rules dissuade potential contributors due to privacy concerns.
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Information at the Margin: Campaign Finance Disclosure Laws, Ballot Issues, and Voter Knowledge
Ethical Law JournalDavid Primo
This paper proposes a framework for studying the relationship between fiscal policy and state constitutions in terms of direct and indirect fiscal restraints and pressures. Fiscal restraints such as balanced budget rules limit the scope of government, while fiscal pressures such as education rights expand or place demands on government.
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