Timothy Werner

The Sound, the Fury, and the Nonevent: Business Power and Market Reactions to the Citizens United Decision

In the wake of the U.S. Supreme Court decision in Citizens United v. Federal Election Commission , supporters of campaign finance reform argued that American politics would soon be awash in corporate cash and that public policy outcomes would reflect the desires of big business. Using event study methodology to isolate the effect of Citizens United on firms’ stock prices, this article finds that the financial markets did not share this view. Rather, key events in the case did not significantly affect the share prices of those large firms heavily engaged in and sensitive to politics, suggesting that investors expected the decision to have no effect on political and policy outcomes of concern to corporate America.

Public Election Funding, Competition, and Candidate Gender

I n 2000, Arizona and Maine implemented full public funding for state legislative elections, and Connecticut will do so in 2008. Candidates who opt to accept public funding receive grants that pay for the entire cost of their campaigns. Advocates of these so-called clean elections argue that the programs reduce quid pro quo corruption, increase electoral competitiveness, and open up the process to candidates who lack access to traditional fundraising networks ~Phelps 2004!. Critics respond that the Maine and Arizona public funding programs have achieved nothing, save for imposing unjust burdens on candidates who refuse to participate ~Basham and Zelder 2005!. Here we address the impact of public funding on competition and campaign decisionmaking. The conventional wisdom holds that public funding programs should be especially advantageous for candidates who are not part of existing recruitment efforts or lack access to key political elites. According to this line of thought, women and challengers—two categories of candidates traditionally shut out from established political networks—will benefit most from this alternate source of campaign funds. This expectation is reasonable enough. But other elements of the conventional wisdom about women and campaign finance are incorrect—women actually raise as much as similarly situated male candidates, sometimes more ~Thompson et al. 1998!. Thus, we need to determine whether public election funding actually increases the diversity of the candidate pool and whether women are indeed more likely to participate in such programs than men. The decision to accept or reject public funding is unambiguous and directly observable. Candidates either take the money, or they do not, in a formal, public, and irrevocable decision. We thus have an opportunity to directly observe differences between male and female candidates and to see how a combination of gender-specific effects and the broader campaign environment shape these differences. Our results show that first, public funding has increased levels of electoral competitiveness, albeit the effects are modest. Second, we find that women are much more likely than men to accept public funding; however, these effects are limited to elections for the house and have no bearing on the overall composition of the candidate pool. Third, we find that the decision to accept public funding depends on the estimated competitiveness of the race. Challengers, in particular, become more likely to accept public funds as races become less competitive and less likely to take it when they appear to have better odds of actually winning. It is apparent that public funding can prompt challengers to emerge when they otherwise would not.

Blacklisted Businesses: Social Activists' Challenges and the Disruption of Corporate Political Activity

This paper explores whether and how social activists’ challenges affect politicians’ willingness to associate with targeted firms. We study the effect of public protest on corporate political activity using a unique database that allows us to analyze empirically the impact of social movement boycotts on three proxies for associations with political stakeholders: the proportion of campaign contributions that are rejected, the number of times a firm is invited to give testimony in congressional hearings, and the number of government procurement contracts awarded to a firm. We show that boycotts lead to significant increases in the proportion of refunded contributions, as well as decreases in invited congressional appearances and awarded government contracts. These results highlight the importance of considering how a firm’s sociopolitical environment shapes the receptivity of critical non-market stakeholders. We supplement this analysis by drawing from social movement theory to extrapolate and test three key mechanisms that moderate the extent to which activists’ challenges effectively disrupt corporate political activity: the media attention a boycott attracts, the political salience of the contested issue, and the status of the targeted firm.

Campaign Contributions from Corporate Executives in Lieu of Political Action Committees

Limiting corporate participation in electoral politics is a central focus of campaign finance reform. In this spirit, individual candidates for office have prohibited corporate-linked political action committees (PACs) from contributing to their campaigns. On the surface, such no-PAC policies might seem like an effective way to keep corporate-linked monies out of electoral politics; however, they ignore the reality that corporate monies have a variety of ways to find their way into candidates’ campaign accounts. We leverage these candidate-specific refusals to accept PAC monies to uncover concomitant spikes in the pattern of corporate executives’ personal campaign contributions that are most pronounced for executives at firms with active PACs which contributed to the candidates in question. These results come from a newly constructed dataset that includes all CEO–firm–candidate contribution pairs for active S&P500 firms over an 18-year period and suggests that CEOs strategically act in lieu of their firms’ linked PACs.

Corporate Lobbying and CEO Pay

This study examines the agency costs of corporate lobbying by exploring the relation between lobbying and excess CEO compensation. We show that CEOs of firms engaged in lobbying earn significantly greater compensation levels compared to CEOs in non-lobbying firms, after controlling for standard economic determinants of pay. The relation between lobbying and CEO pay increases with the intensity of firms’ lobbying. Although lobbying is positively associated future sales growth, we find no evidence suggesting it culminates in shareholder wealth creation. Additional tests reveal that for a subset of firms with available data, governance attributes mediate the relation between lobbying and firms’ decision to lobby. Lastly, a difference-in-difference, propensity-score matched analysis suggests significant increases in CEO pay levels around firms’ initial lobbying engagements. Overall, we conclude that corporate lobbying introduces agency costs borne by shareholders.

Congressmen of the Silent South: The Persistence of Southern Racial Liberals, 1949–1964

Using fuzzy set qualitative comparative analysis, this paper investigates the characteristics of white Southern constituencies that reelected racial liberals to the U.S. House in the period between the 1948 Democratic Convention and the passage of the Voting Rights Act. In doing so, it tests theories of Southern politics and the electoral connection. Further, it also addresses several methodological issues regarding inferences made from comparative–historical research. Ultimately, it reveals that racial liberals from the Peripheral South and the cities of the Deep South were able to establish bonds between themselves and their constituents that were sufficient to win reelection.

Into the Dark: Shifts in Corporate Political Activity after Social Movement Challenges

Using a unique database on social movement boycotts of corporations, we examine how firms alter their political activities in the wake of a reputational threat. We show that boycotts lead to significant reductions in the amount of targets’ political action committee campaign contributions and simultaneous increases in targets’ CEOs’ personal campaign contributions, as well as targets’ lobbying expenditures. We argue that these patterns represent a shift toward more covert forms of political engagement that present new problems for activists and shareholders seeking to monitor corporate political activity.

Blacklisted Benefactors: The Political Contestation of Non-Market Strategy

This paper explores whether and how contentious stakeholders can disrupt a firm’s non-market strategy. We offer the first systematic study of the effect of public protest on corporate political activity, using a unique database that allows us to empirically analyze the impact of social movement boycotts on targeted firms’ campaign contributions. We show that boycotts lead to significant reductions in the amount of targets’ campaign contributions and increase the proportion of contributions that politicians refund. These results highlight the importance of considering how a firm’s socio-political environment shapes its non-market strategy. We supplement this primary analysis by drawing from social movement theory to extrapolate and test a number of mechanisms that moderate the extent to which movement challenges effectively disrupt corporate political activity.

Measuring Corporate Political Sensitivity

The sensitivity of U.S. firms to domestic political uncertainty is an under-conceptualized yet critical component of nonmarket strategy. Using financial and political prediction market data, we develop a panel measure of domestic political sensitivity at the industry level for the period of 2000-2012. We validate this measure in two ways. First, we model how covariates related to financial performance and industrial organization explain across-time and industry variation in sensitivity to the political status quo. Second, we demonstrate that our measure is associated with strategic political activity at the firm level: consistent with the literature on corporate political activity, higher levels of sensitivity correlate with a greater propensity to lobby and larger lobbying expenditures but do not significantly correlate with making campaign contributions.