Rob Jackson

One problem that a lot of people have noticed is that Americans do not spend enough time talking about politics. Yes, you can devote several hours a day to watching political news and forwarding political emails and signing secession petitions, but certain areas of life are not utterly infused with political rancor. Buying stocks is … somewhere on the spectrum, less politicized than buying beer but more politicized than buying toothpaste.

Lucian Bebchuk wants to change that. He has a post on DealBook, based on this paper he wrote with Rob Jackson, urging the SEC to make companies disclose their political contributions, so that you can get all mad and sell your stock in companies that make contributions to your less preferred candidate and buy stock in companies that make contributions to your more preferred candidate. I mean, I can just tell you: buy oil stocks if you’re a Republican and tech stocks if you’re a Democrat and the financial industry is kind of a mixed bag but, lately, Republican.

You could ask yourself a question like “why should a company do what its shareholders want?” and then you could answer “because the shareholders own the company,” but that is not an entirely compelling answer. They don’t really; they are residual claimants on the company’s income, or whatever; nobody owns the company, the company is people my friend; the company is a bundle of sticks, and there you are with your stick, waving it around while you beg the question. The company perhaps – perhaps! – owes shareholders an honest day’s effort to maximize the value of that residual income; it does not owe them doing the things that they want it to do.

But also, how do you know what the shareholders want? Or, what is a shareholder? I like thinking of most efforts at shareholder empowerment as kind of “let’s get rid of the agency costs of letting corporate executives use investor money for their personal silly goals and let investment managers use investor money for their personal silly goals.” Read more »