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Political Contributions by Corporations - Essay Example

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Political Contributions by Corporations

Second, the evidence suggests that in many cases the desired political favors have been and are granted. More specifically, the data demonstrates a correlation between political contributions and benefits allocated among corporations. Finally, with respect to the effect of this link between political contributions and favors granted, the literature suggests some positive characteristics as well as some negative characteristics. Some corporations, for instance, have been granted special access to international markets that generates profits and some employment benefits for Americans whereas some corporations have abused the benefits conferred upon them to the detriment of Americans more generally.
This paper will examine the case of Enron because this case is illustrative of the many issues surrounding political contributions by corporations; to be sure, the Enron case is one of extremes, not experienced in all cases, but these extremes demonstrate the dangers inherent in unregulated or poorly regulated systems for dealing with political contributions by corporations. ...
From a conceptual framework, scholars have approached connections between corporations and politicians in a variety of ways. Some, for example, have examined how connections to politicians affect a corporation's underlying valuation or stock prices (Faccio and Parsley, 2006). The research has found a correlation between certain connections, whether in the form of lobbying or direct political contributions, and this data is well-known by corporations and corporate decisions makers. Because the value of stock prices can be sustained or increased, to some degree, by pursuing political connections, corporate executives are keen to align themselves with some or many politicians. In addition, scholars have also approached the connections between corporations and politicians by noting which corporations have been bailed out with government funds during periods of economic distress, and the extant of the political contributions made by these bailed-out corporations; interestingly enough, the data demonstrates that corporations with stronger political connections, whether in the form of lobbying or political contributions, are more likely to receive governmental bailouts than corporations with less substantial political connections (Faccio, Masulis, and McConnell, 2006). Two other areas of inquiry, of particular relevance in the Enron case, are how connections between political contributions by corporations to politicians affect its export business and its corporate sales through government contracts (Agrawal and Knoeber, 2001) as well as the ability of such corporations to secure certain tax benefits at the state or federal level (Gupta and Swenson, 2003).
A review of the literature, therefore demonstrates that there are many important reasons for corporations to ...Show more

Summary

That political contributions are made by corporations is beyond question; the more interesting issues concern whether corporations expect certain favors in return for such contributions, whether certain favors are in fact granted, and the implications for the American public…
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Political Contributions by Corporations essay example
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