Shareholder voting is a focal point of corporate law and an ongoing subject of scholarly dispute. We offer new insights from a study of shareholder proposals seeking disclosure of political influence activities.

These proposals are distinctive for two reasons. First, because political disclosure proposals tend to be relatively low salience, they shed light on the dynamics of the proposal process when it is least likely to attract outside attention. Second, the Supreme Court in Citizens United placed corporate political influence squarely in the realm of ordinary corporate governance. Studying political disclosure proposals sheds light on the effectiveness of these mechanism providing transparency about corporate political activity. Because political expenditures and lobbying activities are likely to be substitutes, we include both categories of proposals in our study, but distinguish between the two groups in our analysis.

We uncover several striking findings. The political disclosure proposals in our sample (2015-2023) have been sponsored by a diverse array of governance entrepreneurs from across the ideological spectrum. The targeting follows rational patterns: political expenditure proposals are less likely to be targeted at companies with better existing disclosures than their peers, and there is no relationship between lobbying proposals and political disclosures. This suggests that proponents are not engaged in across-the-board targeting. Aggregate voting also follows a rational pattern, and companies that are targeted with these proposals tend to provide more disclosure in the years that follow.

We then turn to the behavior of specific investors. Even when it comes to these low-salience proposals, we find evidence that is inconsistent with investor apathy. Specifically, we find no evidence that asset managers are either blindly following proxy adviser recommendations or that they are using one-size-fits-all voting rules. which is inconsistent with investor apathy. We also find marked differences between pension funds and mutual fund voters, which raises intriguing questions about the stewardship activities of the former group.

In sum, investors appear to be engaged with political disclosure proposals and seem to act rationally in deciding whether to sponsor or support them. In other words, private ordering seems to be working fairly well, and the ordinary mechanisms of corporate governance seem to be doing their job.

Time & Location

14 November 2024 | 6:00–7:30 p.m.

In-person & online
Business School | Thielallee 73 | Room 013
Join via https://fu-berlin.webex.com/fu-berlin/j.php?MTID=m1ef63b9857be6ccf0e0c091fb74a0d41