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How PAC Contributions Lost Their Punch in Big Business

Sedovicova, Nina LU and Fowler, Aaron Nathaniel LU (2025) BUSN79 20251
Department of Business Administration
Abstract
This paper examines the evolution of the return premium associated with corporate PAC contributions among S&P 500 firms between 1993 and 2024, and assesses whether political giving continues to yield financially meaningful payoffs. A panel of 500 large-cap firms (per year) is analyzed using OLS firm and year fixed-effects regressions. Key regressors include continuous PAC-donation amounts, interaction terms for election-year and time-trend effects, and robust standard errors clustered at the firm level. The estimated marginal PAC‐return premium has declined steadily, converging
toward zero in recent election cycles. This attenuation suggests diminishing signalling value of political contributions and reinforces the case for tighter... (More)
This paper examines the evolution of the return premium associated with corporate PAC contributions among S&P 500 firms between 1993 and 2024, and assesses whether political giving continues to yield financially meaningful payoffs. A panel of 500 large-cap firms (per year) is analyzed using OLS firm and year fixed-effects regressions. Key regressors include continuous PAC-donation amounts, interaction terms for election-year and time-trend effects, and robust standard errors clustered at the firm level. The estimated marginal PAC‐return premium has declined steadily, converging
toward zero in recent election cycles. This attenuation suggests diminishing signalling value of political contributions and reinforces the case for tighter campaign-finance reforms. (Less)
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author
Sedovicova, Nina LU and Fowler, Aaron Nathaniel LU
supervisor
organization
course
BUSN79 20251
year
type
H1 - Master's Degree (One Year)
subject
keywords
Political contributions, PAC-return premium, S&P 500, Election cycles, Political signalling
language
English
id
9207280
date added to LUP
2025-06-30 14:02:58
date last changed
2025-06-30 14:02:58
@misc{9207280,
  abstract     = {{This paper examines the evolution of the return premium associated with corporate PAC contributions among S&P 500 firms between 1993 and 2024, and assesses whether political giving continues to yield financially meaningful payoffs. A panel of 500 large-cap firms (per year) is analyzed using OLS firm and year fixed-effects regressions. Key regressors include continuous PAC-donation amounts, interaction terms for election-year and time-trend effects, and robust standard errors clustered at the firm level. The estimated marginal PAC‐return premium has declined steadily, converging
toward zero in recent election cycles. This attenuation suggests diminishing signalling value of political contributions and reinforces the case for tighter campaign-finance reforms.}},
  author       = {{Sedovicova, Nina and Fowler, Aaron Nathaniel}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{How PAC Contributions Lost Their Punch in Big Business}},
  year         = {{2025}},
}