US firms warned over risks of political spending

A new report has urged major US companies to consider the corporate governance implications of their political donations.

Published to coincide with the mid-term congressional elections, the study from the Conference Board warned that firms could be exposed to "serious financial, legal and reputational risks" as a result of campaign spending.

The New York-based corporate governance research group has created a new Handbook on Corporate Political Activity in an attempt to guide executives through the process.

"Any corporation participating in political activity without a rigorous corporate governance process heightens its risk exposure," said Bruce Freed, co-author of the handbook.

Paul DeNicola, director of the Conference Board Governance Center, added that the new proxy season is expected to bring fresh shareholder proposals on issues such as spending disclosure and board oversight.

Mr Freed, who is also president of the Washington-based Center for Political Accountability, told Bloomberg that companies can shield themselves against future problems "by acting responsibly now".