Political Connectedness and Corporate Policies
The Harvard Law School Forum on Corporate Governance and Financial Regulation 2013-07-01
In our paper, “The Impact of Political Connectedness on Firm Value and Corporate Policies: Evidence from Citizens United,” we examine the reasons behind a company’s decision to become politically connected and what impact such connections have on firm value and corporate policies. Political connections may enhance or harm shareholder value. However, existing insights attempting to address the impact of corporate political connectedness on shareholder value are inconclusive. In an effort to test for the existence of a causal link between political connections and changes in shareholder value, we pose our research questions in the context of a natural experiment. Specifically, we focus on an exogenous enhancement in the value implications of political connectedness that accompanied the landmark Supreme Court case, Citizens United.