Shining Light on Corporate Political Spending

This Article puts forward the case for Securities and Exchange Commission (SEC) rules requiring public companies to disclose their political spending. We present empirical evidence indicating that a substantial amount of corporate spending on politics occurs under investors' radar screens, and that shareholders have significant interest in receiving information about such spending. We argue that disclosure of corporate political spending is necessary to ensure that such spending is consistent with shareholder interests. We discuss the emergence of voluntary disclosure practices in this area and show why voluntary disclosure is not a substitute for SEC rules. We also provide a framework for the SEC's design of these rules. Finally, we consider and respond to the wide range of objections that have been raised to disclosure rules of this kind. We conclude that the case for such rules is strong, and that the SEC should promptly develop disclosure rules in this area.