Corporate Governance: Civic Engagement by Businesses is Good for Democracy

January 1, 2018   •  By IFS Staff   •    •  

Corporations, like unions and other organizations, have a constitutional right to discuss politics. In fact, Americans expect companies to advocate for policies that protect their employees’ jobs, reduce costs to consumers, and spur technological innovation and growth. The courts have sanctioned the political speech rights of corporations on many occasions.

Having lost the constitutional battle, those who oppose corporate speech rights have instead approached corporations directly, as a small number of activist investors. They demand that corporations change how they make internal decisions and voluntarily relinquish their constitutional rights. They argue that political speech carries outsized risks to shareholder value, due to threats of boycotts or other politically motivated reprisals. This position is not supported by evidence. Academic research has shown that corporate political engagement is good for democracy, beneficial to public knowledge, and valuable for businesses and their shareholders. Corporations would be wise to continue to engage politically, despite calls by some to the contrary.

IFS Staff

IFS Staff