Resumo

Literature on campaign contributions has focused on corporate contributions, but little is known about the behavior of individuals affiliated with these firms. Some studies have focused on the CEO, president, and board chair (eg, Burris, 2001; Gordon et al., 2007), but individual shareholders are still overlooked. Individuals, unlike firms, have political preferences, donate because they are enthusiastic about politics or to obtain private benefits but they can obtain benefits for the firm.

Political contributions receive controversial opinions in many countries, including Brazil, which passed a law in 2015 to ban corporate donations. But what have change in Brazil after the prohibition of corporate donation? The media coverage shows that a lot of individual shareholders have donated during the 2018’ campaign election. However, we still don’t know how is the donation impact? After an in-depth hand collected data we could understand individual shareholder giving strategy and analyze the impacts of individual shareholder’s campaign donation in the firm’s market value.

Donation to campaign come from different sources, firms, associations and individuals that seek private benefits set by the government. Individuals contributions follow a different logic than those made by firms, but both impact the political system and are necessary for a balanced evaluation of the policy (Burris, 2001). However, if there is an institutional shock, in which firm’s is not allowed to make campaign contribution, the individual shareholder’s contribution might follow the firm’s political preference.

We assess the relationship of contributions to election campaigns carried out by individual shareholders and the market value of firms where they have their capital invested. Our study presents a longitudinal section in an unbalanced panel. We considered the listed firms on the Brazilian stock exchange B3 that have in their ownership structure at least one individual shareholder and at least the firm is listed in one year from 2010 to 2020. The sample is composed of 348 firms that generated 3,828 observations firms/year. We collected data from publicly available sources.

The hypothesis H1 is supported for amount donated and the number of candidates that receive donations. However, it is possible to infer that the variables related to political parties do not support H1. The H2 is supported, according to which the amount donated and the number of individual shareholders in donations to candidates and parties positive association with the firm’s market value. The tests for H3a did not show significant results. Empirical evidence suggests supporting H3b, as they did not demonstrate a positive or negative relationship with the market value of firms.

Our results demonstrate that, after the regulation of corporate contributions in Brazil, there was an increase in contributions from individual shareholders of Brazilian firms to political candidates. On the other hand, the amounts donated to political parties did not follow the same logic. We verified an increase in the number of candidates supported by these shareholders, corroborating studies already carried out with corporate donations. However, the same did not happen with political parties, with no growth in the number of beneficiaries.

Aggarwal, R. K., Meschke, F., & Wang, T. Y. (2012). Corporate political donations: investment or agency?. Business and Politics, 14(1), 1-38. Burris, V. (2001). The two faces of capital: Corporations and individual capitalists as political actors. American Sociological Review, 361-381. Gordon, S. C., Hafer, C., & Landa, D. (2007). Consumption or investment? On motivations for political giving. The Journal of Politics, 69(4), 1057-1072.