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The Efficiency of Corporate Political Speech Bylaws

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1 Response

  1. Douglas Levene says:

    IMHO, Stephen Bainbridge has the right approach to political speech by corporations. It should be subject to the business judgment rule, just like all the other things that boards do. If a board decides that supporting a particular policy or politician would be beneficial for the corporation, that should be subject to the same standard as when the board decides that giving money to a charity would be beneficial for the corporation.

    The argument about exit costs being unusually high seems weak. Indeed, the costs to exit from owning a few shares of stock in a public corporation – push a button on your computer and sell the shares and then buy some other shares – seems rather low compared to, say, the costs of exiting a union because you don’t like its politics – that usually requires losing your job, which is rather more burdensome. But we don’t require unions to seek approval from their members for political speech – union members get to vote on the union officers, just like stockholders get to vote for corporate directors, and then they have to live with the decisions the union officers make about how to promote the union’s interests, including by engaging in political activity.