Wednesday, June 13, 2012

Politics:  Political Spending: Bad for the Bottom Line?

Researchers looked at the relationship between corporate political giving and financial returns for 943 companies between 1998 and 2008, and discovered that companies' political investments "are negatively associated with market performance."

What's more, the revolving door between government and business doesn't seem to help their performance either. "Firms placing former public officials on their boards experienced inferior market performance and similar accounting performance than firms without such board members," a press statement on the study explains.

Why doesn't political giving pay? Researchers have a couple of explanations: executives who support political giving might generally make overly risky business decisions, and personal ideological beliefs can trump business pragmatism when it comes to giving as well.

That said, there is one exception to their findings: for companies in highly regulated industries, there is a link between political giving and company performance.

For more, see Political Spending: Bad for the Bottom Line? by Suzy Khimm, June 12, 2012 at Wonkblog.

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