Corporate Governance

Corporate Governance and Campaign Finance: Citizens United v. FEC (Introduction)

By J. Robert Brown

We don't ordinarily delve into campaign finance issues but  the Supreme Court's recent decision in Citizens United v. Federal Election Commission,  No. 08–205,  Jan. 21, 2010, merits some unique attention.  As everyone who has not lived under a rock for the last several weeks knows, the Supreme Court largely threw out a provision of McCain-Feingold that restricted the right of corporations to expend funds on political campaigns, concluding that the restrictions interfered with the first amendment rights of corporations.

The particular provision at issue did not involve restrictions on corporate contributions to political campaigns or prohibitions on expenditures that expressly advocated the election or defeat of a candidate.  Instead, the case inolved language added in 2002 that prohibited expenses for anything deemed to be an  'electioneering communication."  The term encompassed communications that referred "to a clearly identified candidate for Federal office' and was made 30 days before a primary or 60 days before a general election. See 2 U. S. C. §441b; see also 2 U. S. C. §434(f)(3)(A).  In short, corporations (and unions) could not pay for communications that referred by name to candidates just before an election. 

There are a number of topics that warrant examination.  First, there is an interesting discussion of the history of the corporate form in the United States.  Second, there is a suggestion that the best place to solve the corporate expenditure process is through resort to corporate governance.  We will discuss assertion.  Third, there is room for some regulatory intervention both by the Securities and Exchange Commission and Congress.  Finally, we will examine two places where the majority evidenced an activist approach in deciding the case.

Full post as published by The Race to the Bottom on February 08, 2010 (boomark / email).