Friday, August 05, 2011

Trust, but Verify Through Disclosure?

An email from Lucian Bebchuk:

...a group of ten corporate and securities law experts submitted a rulemaking petition to the Securities and Exchange Commission. The petition urges the Commission to develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities. The petition was submitted by the Committee on Disclosure of Corporate Political Spending, co-chaired by Robert Jackson Jr. and myself and composed of ten academics whose teaching and research focus on corporate and securities law.

The petition presents data indicating that public investors have become increasingly interested in receiving information about corporate political spending. It observes that many public companies have voluntarily adopted policies requiring disclosure of the company’s spending on politics, and these disclosure practices can provide a useful starting point for the SEC in designing disclosure rules in this area. The petition then suggests that disclosure of information on corporate political spending is important for the operation of corporate accountability mechanisms, including those that the Supreme Court has relied upon in its analysis of corporate political speech. Finally, the petition explains that the design of disclosure rules concerning political spending would involve choices similar to those presented by the disclosure rules previously developed by the Commission, and thus that the Commission has ample experience and expertise to make these choices .

The full petition is available on the SEC’s website here.

Best, Lucian

Interesting. What say you?


Anonymous said...

If they wanted this, why wouldn't shareholders put this into the contract? Are we sure that this should be required of all firms?

Tom said...

Aside from spending directly related to the conduct of business, corporate officers spend the stockholders' money because the stockholders might not spend it correctly. So... spending on politics? Why don't they disclose ALL such indirect spending? Why not include a statement in such disclosure of exactly why the corporate officers think the stockholders are too ignorant, stupid, or lazy to spend their money correctly?