Corporate Speech

I recently found myself in an argument about the rights of a corporation to speak on political issues. To give some context, it was a long discussion beginning with talk of the bailouts and financial regulation and moving towards whether corporations have a right to speak and corporate personhood in general. While there was plenty of fodder for blog entries, I am addressing the corporate speech issue.

Shareholders have interests in a company doing well and sometimes regulation or tax policy is a critical issue. Shareholders and directors acting on behalf of themselves have the right to advocate for or against various issues. I think most people would agree to that proposition.

However, in order to be effective in promoting the interests of the shareholders the speech needs to be coordinated. In practice, the transaction costs are far too high not to do so and shareholders are not neccessarily aware of all the issues that are relevant. They have appointed directors to deal with that and anything else in the day to day operation the the company.

In principle, people do not lose rights when they pool their resources and appoint agents to represent them.(a corporation) "Issue" ads are exactly the type of speech that was intended to be protected. To prohibit corporate speech in favor or against policies is to tie the hands of the shareholders and effectively prevent them from promoting their interests.