Title

The Economics of Corporate Lobbying

Publication Date

2018

Abstract

Prior literature examines motivations and impact of corporate lobbying and presents inconclusive evidence. We examine the association of corporate lobbying with firm performance by focusing on how this relationship varies with firm characteristics. Addressing various endogeneity concerns, our analysis shows that corporate lobbying has a negative association with firm performance. We find that the negative association between corporate lobbying and firm performance is largely driven by operationally complex firms. On the other hand, firms with high growth opportunities benefit more from lobbying than low-growth firms. Lobbying seems to provide limited tangible benefits in terms of helping a firm obtain government contracts or successfully pass the congressional bills lobbied. These results suggest that agency costs dominate the strategic benefits of lobbying activities. However, there is some evidence that firms benefit when there is political alignment between the firm and the party in power. © 2018 Elsevier Ltd

Publication Title

Journal of Corporate Finance

Volume

49

First Page

54

Last Page

80

DOI

10.1016/j.jcorpfin.2017.12.012

Version

pre print, post print (with 12 month embargo)

This document is currently not available here.

Find in your library

Share

COinS