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Managing the Risks of Corporate Political Donations: A Utilitarian Perspective

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  • Shane Leong
  • James Hazelton
  • Cynthia Townley

Abstract

This paper applies a utilitarian analysis to corporate political donations. Unlike the more common rights-based analyses, it is argued that the optimal policy is the one that best satisfies society’s rational preferences concerning donor influence, adequate financing, donor pressure and the cost of maintaining and enforcing the democratic system. This analysis suggests that a ban is best if it would be generally observed and sufficient financing from other sources is available, otherwise a donation cap is a better option. Further, lobbyists should be banned from donating small gifts and drafting bills for candidates. The impact of disclosure and other risk management mechanisms are also considered. Copyright Springer Science+Business Media Dordrecht 2013

Suggested Citation

  • Shane Leong & James Hazelton & Cynthia Townley, 2013. "Managing the Risks of Corporate Political Donations: A Utilitarian Perspective," Journal of Business Ethics, Springer, vol. 118(2), pages 429-445, December.
    • Handle: RePEc:kap:jbuset:v:118:y:2013:i:2:p:429-445
    DOI: 10.1007/s10551-012-1592-z
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    Cited by:

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    2. Adrian, Christofer & Garg, Mukesh & Viet Pham, Anh & Phang, Soon-Yeow & Truong, Cameron, 2022. "Policy and oversight of corporate political activities and the cost of equity capital," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(2).
    3. Yik-Pui Low, Steven & Foo, Yee-Boon & Gul, Ferdinand A, 2023. "Corporate lobbying: Resource-seeking or rent-seeking? Evidence from audit fees," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(1).
    4. Tahiru Azaaviele Liedong, 2021. "Responsible Firm Behaviour in Political Markets: Judging the Ethicality of Corporate Political Activity in Weak Institutional Environments," Journal of Business Ethics, Springer, vol. 172(2), pages 325-345, August.
    5. Necmi K. Avkiran & Direnç K. Kanol & Barry Oliver & Tom Smith, 2016. "Knowledge of campaign finance regulation reduces perceptions of corruption," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(4), pages 961-984, December.
    6. Tahiru Azaaviele Liedong, 2022. "The Liability of Tribe in Corporate Political Activity: Ethical Implications for Political Contestability," Journal of Business Ethics, Springer, vol. 181(3), pages 623-644, December.
    7. Lisa Baudot & Robin W. Roberts & Dana M. Wallace, 2017. "An Examination of the U.S. Public Accounting Profession’s Public Interest Discourse and Actions in Federal Policy Making," Journal of Business Ethics, Springer, vol. 142(2), pages 203-220, May.
    8. Mary Stoll, 2015. "Corporate Political Speech and Moral Obligation," Journal of Business Ethics, Springer, vol. 132(3), pages 553-563, December.

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