The Good, the Bad, and the Ugly of Corporate Personhood and Corporate Political Spending: Implications for Shareholders

• Date: 01 December 2016
• Author: Patricia L. Nemetz
• Published date: 01 December 2016
• DOI: http://doi.org/10.1111/basr.12103

The Good, the Bad, and the

Ugly of Corporate Personhood

and Corporate Political

Spending: Implications for

Shareholders

PATRICIA L. NEMETZ

ABSTRACT

In the Citizens United v. Federal Election Commission

(2010) decision, the Supreme Court rendered an opinion

verifying the legality of unions and corporations to spend

funds from their general treasuries to finance independent

expenditures related to political and electioneering com-

munications. Such speech and communications are con-

stitutionally protected by the First Amendment, according

to Justice Kennedy, who wrote the majority opinion (558

U.S. 22, 2010). The dissenting opinion questioned whether

such rights should accrue to corporations, since corpora-

tions differ from constitutionally-protected “natural per-

sons” (dissent, 558 U.S. 50 at 2, 2010; Johnson 2011). The

decision ignited a firestorm of controversy, which renewed

interest in the legal concept of corporate personhood.

This article reviews key findings in the Citizens United

v. FEC case, then describes the historical, legal, and theo-

retical concepts of corporate personhood with the goal of

Patricia L. Nemetz is Professor of Management and Department Chair at Eastern Washington

University. E-mail: pnemetzmills@ewu.edu.

V

C2016 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by

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Business and Society Review 121:4 569–591

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unbundling the nuanced consequences of the majority

and dissenting opinions of the Citizens United v. FEC

case. The analysis then turns to a shareholder perspec-

tive, with particular emphasis on the implications for

shareholders’ rights and responsibilities. It concludes

with an exploration of options available to shareholders

concerned about how to respond when a corporation uses

its resources to communicate political opinions at odds

with their own.

INTRODUCTION

“Corporations Are Not People!”

A clarion call of injustice from populist organizations, such as

“Occupy” and “Move to Amend” (Clements 2014; Johnson 2011;

Lamoreaux and Novak 2014; Reclaim Democracy 2015; Ripken

2012), has raised concern that anthropomorphic “rights” for profit-

driven corporations are destructive to governmental democracy.

The impetus for these movements springs from the Citizens United

v. Federal Election Commission (2010) decision. By a majority of 5-

4, the Supreme Court rendered a decision verifying the legality of

unions and corporations to spend funds from their general treasur-

ies to finance independent expenditures related to political and

electioneering communications. Such speech and communications

are constitutionally protected by the First Amendment, according

to Justice Kennedy, who wrote the majority opinion (558 U.S. 22,

2010). The dissenting opinion questioned whether such rights

should accrue to corporations, since corporations differ from

constitutionally-protected “natural persons” (dissent, 558 U.S. 2,

2010; Johnson 2011). The decision ignited a firestorm of controver-

sy, which renewed interest in the legal concept of corporate

personhood.

A range of interest groups is committed to eliminating this

human-rights loophole by rallying for ratification of a constitution-

al amendment to eliminate corporate personhood (Clements 2014;

Reclaim Democracy 2014; Williamson 2011). The protestations of

such movements, however, do not clearly illuminate how the

Court’s decision impacts less disaffected constituencies, such as

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