Voluntary Disclosure on Corporate Political Spending Is Not Enough

Lucian Bebchuk is Professor of Law, Economics, and Finance at Harvard Law School. Robert J. Jackson, Jr. is Associate Professor of Law and Milton Handler Fellow at Columbia Law School. Bebchuk and Jackson served as co-chairs of the Committee on Disclosure of Corporate Political Spending, which filed a rulemaking petition concerning political spending, discussed on the Forum here and here. Posts discussing their articles on corporate political spending, Corporate Political Speech: Who Decides?, and Shining Light on Corporate Political Spending, are available here.

In an article published today by New York Times DealBook, as part of Lucian Bebchuk’s column series, we focus on the expected SEC consideration of the rulemaking petition urging adoption of rules that would require public companies to disclose information about their political spending.

Opponents of mandatory disclosure rules can be expected to claim that the recent willingness of some large public companies to voluntarily disclose information about their political spending makes it unnecessary for the SEC to adopt such rules. This area can be left to private ordering, it might be argued, allowing each company to choose the level and type of disclosure that best suits its needs. We explain why the SEC should not accept such claims.

The decisions by some large public companies to begin disclosing voluntarily information about their political spending is a positive development. But the emergence of voluntary disclosure practices, we show, does not obviate the need for mandatory rules in this area. Requiring disclosure on corporate political spending is needed to ensure that all public companies provide clear, consistent information that enables investors to know whether, and how, their money is being spent on politics.

The column, titled “Voluntary Disclosure on Corporate Political Spending Is Not Enough,” is available here.

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