Political payoff: campaign giving and stock prices.

• Author: Doherty, Brian
• Position: Citings - Brief article

WHILE THERE are no solid data proving that campaign contributions directly change politicians' behavior, a new study offers evidence that political giving helps corporations. In a new working paper published by the Social Science Research Network, three business school professors--Michael Cooper of the University of Utah and Huseyin Gulen and Alexei Ovtchinnikov of Virginia Tech--study campaign contributions from corporate political action committees over 25 years. They find that giving a lot to many successful candidates seems to correlate with remarkably lucrative hikes in company's stock values.

In fact, they found the annual return on investment, in terms of increased stock prices for political giving, to be "an absurdly high 654,836 percent." Compared to what their return would otherwise be expected to be, that's an average one-year increase in stock value of $154 million per year. Thousands of firms were involved in the study, with untold numbers of potential legislative actions that might have benefited them, from tariffs on...