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Stakeholder activity can have a significant impact on a company’s political contributions

After the Jan. 6, 2021 U.S. Capitol riots, many companies pledged to suspend Political Action Committee (PAC) campaign contributions to Republican congressmen who opposed 2020 Electoral College numbers. a new study Zhao Li When Richard Disalvo We found that companies with more Democratic-leaning stakeholders, such as employees and Twitter followers, were more likely to freeze donations to Republican opponents. They also noted that while many companies that had previously paused donations to the PAC, which supports the Republican opposition, have since started donating again, they are now doing this at a much lower rate. I also found

The attack on the US Capitol on January 6, 2021 shocked the nation and the world. He also urged public opinion against corporations not only to condemn the event but also to sever ties with his 147 Republicans who opposed the 2020 electoral college numbers (referred to as “GOP opponents”). The pressure has increased. Shortly after the riots, CNN conducted a survey of 280 Fortune companies that made campaign donations to Republican opponents from 2019 to his 2020 through their corporate political action committees (PACs). Of the 123 companies that pledged to respond, 87 pledged to suspend all his PAC contributions to re-evaluate candidate selection criteria, and 36 would freeze his PAC contributions to the Republican Opposition. Stated.

To our knowledge, such a concerted effort among large US corporations to withhold donations to the PAC in order to take a public stand on controversial socio-political issues. No action was taken. Businesses commonly use PAC contributions to purchase access to lobbying and regulatory incentives for influential legislators.

Nevertheless, many companies have refused to announce adjustments to their contributions to the PAC (especially by boycotting Republican opponents) in response to the Capitol uprising. Additionally, the press has accused companies of hypocrisy for breaking PAC promises.

Why do some companies boycott the Republican opposition and others don’t?

Why do companies vary in their stated and revealed commitments to stop PAC contributions to Republican opposition? ) are more likely to commit to suspending PAC donations, especially to Republican opponents. Our hypothesis is based on a growing body of research highlighting the influence of stakeholders on corporate political activity. Some stakeholders (especially employees) are well informed about who her PAC of the company is contributing to. And despite the lack of formal decision-making power, stakeholders have a variety of market and governance instruments to influence the company’s allocation of her PAC contributions.

Reflecting the polarized public response to the Capitol riots, there are many Democratic-leaning stakeholders, as evidenced by the employee’s past campaign giving records and the political makeup of the company’s Twitter followers. It turns out that companies are likely to announce a freeze on donations to the PAC. Targets Republican opponents (36 companies). We also examine the company’s historical contribution patterns to the corporate PAC (partisan leanings, historical sensitivity to partisan swings in Congress, historical contributions to Republican opposition), reputational concerns, and corporate social responsibility. Even after considering tracks, stakeholder partisanship proves to be important. records, and geographic ties to Republican opposition. In contrast, as Figure 1 shows, stakeholder partisanship does not significantly predict whether companies will announce a moratorium on all donations to all stakeholders at the federal level. This he was the case with 87 companies.

Figure 1 – Likelihood of companies suspending donations to PAC

Panel A displays results from three separate regressions, each inputting only one measure of stakeholder partisanship (e.g. Twitter % Dem. for Regression 1, Employee Donor % Dem.). Panel B displays the results of one regression in which all three measures of stakeholder partisanship were entered simultaneously. The effect is multiplicative. A factor of 1 (vertical line) has no effect.

Recent campaign finance trends

What’s happened since these pledges were announced? We also analyzed campaign finance disclosures for three corporate groups through the first quarter of 2022, by type of pledge.

As shown in Figure 2, the second quarter of 2021 shows a marked difference in the likelihood that companies will donate to the Republican opposition. So did companies that refused to publicly commit to changing their PAC contribution practices.

Figure 2 – Strong commitments, wide margins

In contrast, the companies (36) that have pledged to freeze donations to Republican opponents have been reluctant to fund campaigns for these lawmakers through 2021. Funding channels in politics are still observable, including corporate PAC contributions to the Republican Opposition Leadership PAC, employee campaign contributions to the Republican Opposition, and corporate contributions to the Republican Bar Association.

Photo by Adam Nir on Unsplash

Among the companies pledging to suspend PAC contributions to Republican opposition by 2022: Any PAC’s donations to Republican opponents increased significantly, albeit at a lower percentage than other companies. More importantly, as shown in Figure 3, intensive Margins on corporate PAC donations, specifically how many Republican oppositions corporate PACs donated each quarter – Most companies that committed to freezing donations to Republican opposition also donated to far fewer Republican opponents.

Figure 3 – Firm adherence to pledges, centralized margin

Corporate stakeholders matter where political contributions are made

The composition of corporate stakeholders as the public increasingly demands corporate leadership on socio-political challenges such as Black Lives Matter, LGBTQ rights, access to abortion, and voter disenfranchisement and associated actions can determine which companies will speak up. And which companies are putting money out of their mouths. However, the net impact on society of stakeholder activism targeting corporate political activity is ambiguous. On the one hand, stakeholders (pro-democracy in our case) mobilize corporations to defend democratic institutions through more meaningful public statements and more enduring commitments of corporate political resources. maybe you can.

On the other hand, when stakeholders seek to turn corporate political activism into new frontiers of corporate advocacy, this runs the risk of retaliation from targeted politicians (such as Republican opponents) and It could spark a populist backlash among the politician’s supporters. By undermining the bipartisan legislative coalition that corporate America has meticulously cultivated through decades of contributions to the PAC, such observable efforts of corporate influence-seeking Stakeholder activism targeting flanks can ultimately “blacken” these activities.

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