According to this article in TIME and researchers from the University of Kansas and the University of Minnesota, the answer is “no.” The researchers examined data on corporate political donations from 1991 to 2004. Among their key findings:
- for every $10,000 in direct political donations a company makes, its share price underperforms by 0.074% annually translating into an average “cost” to shareholders of $1.33 million in market value;
- companies with high donation rates are large and slow-growing with more free cash flow, yet they engage in less R&D (research and development) and investment spending; and
- better corporate governance (smaller boards, CEOs who are not also the chairperson of their board, less abnormal CEO compensation, larger block ownership, and larger institutional ownership) is associated with smaller donations.
As one of the researchers stated in this press release, “better governance may reduce donations… and companies like IBM and Colgate-Palmolive completely bar political contributions in their codes of conduct,” and the study “finds no evidence that shareholders benefit from corporate political donations.”
You can read the full report here.
