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Shining a Light on Firms’ Political Connections: The Role of Dark Money

Author

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  • Matthew Denes
  • Madeline Marco Scanlon

Abstract

We study the emergence of a new channel for firms’ political activity using dark money through undisclosed and unlimited contributions. After the U.S. federal court decisions in 2010, S&P 500 firms substantially increased their use of dark money. We find that dark money contributions complement political engagement through campaign contributions and lobbying. Firms disclose dark money contributions when they face heightened nondisclosure costs. Firms contributing to dark money groups benefit by receiving more procurement contracts and increased government subsidies. Our findings highlight that political connections by firms are evolving and expanding through new and largely unexplored channels. (JEL D72, D73, G38, H57)

Suggested Citation

  • Matthew Denes & Madeline Marco Scanlon, 2025. "Shining a Light on Firms’ Political Connections: The Role of Dark Money," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 14(4), pages 989-1023.
    • Handle: RePEc:oup:rcorpf:v:14:y:2025:i:4:p:989-1023.
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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