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How Do Investors React to Corporate Political Spending Disclosure?

Bable, Jordan (2018) How Do Investors React to Corporate Political Spending Disclosure? Doctoral Dissertation, University of Pittsburgh. (Unpublished)

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My dissertation consists of three main parts. In the first part, I provide a literature review discussing the history of campaign finance law in the United States, the literature examining the determinants of corporate political spending, the literature examining the influence of political concerns on investing decisions, and the literature applicable to the disclosure of corporate political spending. This part is intended to provide the reader with a broad base of information to better understand the context of my experimental study in the second part.
In the second part, I present an experimental study examining how investors react to the disclosure of corporate political spending. In the ongoing debate over whether public companies should be required to disclose their political spending, one frequent argument against requiring disclosure is that investors do not consider political spending information relevant for their decisions. However, I predict and find in my experiment that investors whose political identities are aligned with a company’s political spending assess the company as more attractive and invest more in the company than investors whose political identities are misaligned with the political spending. Interestingly, this effect stems from the negative reactions of misaligned investors. The attractiveness assessments and investment amounts of misaligned investors are significantly lower than those of investors in a control condition with no political spending disclosure, but those of aligned investors are not significantly different from those in the control condition. My results also provide evidence that investors use political spending information consciously rather than because of a subconscious bias. These findings have implications for regulators because, contrary to the argument that political spending information is irrelevant to investors, my results suggest that investors consciously use political spending information in their investment decisions.
In the third part, I discuss future research possibilities on corporate political spending disclosure. I outline research questions that would extend my experimental study, and I identify research questions related to managerial decision-making about corporate political spending and its disclosure. Finally, I note the importance of also considering the effects of corporate political spending disclosure on other stakeholders such as suppliers and customers.


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Item Type: University of Pittsburgh ETD
Status: Unpublished
CreatorsEmailPitt UsernameORCID
Bable, JordanJordan.Bable@gmail.comjmb297
ETD Committee:
TitleMemberEmail AddressPitt UsernameORCID
Committee MemberEvans,
Committee MemberFeng,
Committee MemberHoffman,
Committee MemberMartin,
Committee ChairMoser,
Date: 27 September 2018
Date Type: Publication
Defense Date: 15 December 2017
Approval Date: 27 September 2018
Submission Date: 1 June 2018
Access Restriction: 1 year -- Restrict access to University of Pittsburgh for a period of 1 year.
Number of Pages: 99
Institution: University of Pittsburgh
Schools and Programs: Joseph M. Katz Graduate School of Business > Business Administration
Degree: PhD - Doctor of Philosophy
Thesis Type: Doctoral Dissertation
Refereed: Yes
Uncontrolled Keywords: Corporate political spending, disclosure, investor reaction
Date Deposited: 27 Sep 2018 17:33
Last Modified: 27 Sep 2019 05:15


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