Playing Politics with Shareholder Value: The Case for Applying Fiduciary Law to Corporate Political Donations Post-Citizens United

Abstract

The 2010 midterm elections following the Supreme Court’s landmark decision in Citizens United v. FEC saw a spike in contributions from outside (non-party) sources: these groups spent over four times as much as any other single midterm election cycle. This phenomenon underscores both the psychological and competitive impact that Citizens United undoubtedly had on the political behavior of the American corporation. As more businesses begin to exercise their right to participate in political campaigns, directors and managers must still honor their fiduciary responsibilities to the corporation and its shareholders. Against the backdrop of Citizens United and its apparent effects on corporate political spending, this Note explains how fiduciary law could serve as a check on the unbridled discretion enjoyed by corporate leadership to use general treasury funds for purely political ends. Fiduciary duties protect shareholders’ investments from managerial self-interest and ensure that corporate leaders make careful, well-informed decisions that are truly in the best interests of the firm. To that end, shareholders could use these fundamental principles of corporate law to promote greater accountability and transparency when corporations become involved in highly contentious political campaigns.