Corporate Lobbying and Firm Performance
University of Zurich
David C. Parsley
Vanderbilt University – Finance
Wake Forest University - Schools of Business
Corporate lobbying activities are designed to influence legislators, regulators, and courts, presumably to encourage favorable policies and/or outcomes. In dollar terms, corporate lobbying expenditures are typically one or even two orders of magnitude larger than spending by Political Action Committees (PAC), and unlike PAC donations, lobbying amounts are direct corporate expenditures. We use data made available by the Lobbying Disclosure Act of 1995, to examine this more pervasive form of corporate political activity. We find that on average, lobbying is positively related to accounting and market measures of financial performance. These results are robust across a number of empirical specifications. We also report market performance evidence using a portfolio approach. We find that portfolios of firms with the highest lobbying intensities significantly outperform their benchmarks in the three years following portfolio formation.
Number of Pages in PDF File: 42
Keywords: Corporate Lobbying, political strategy, market returns, portfolio
JEL Classification: G3, G14, G18, G38, D22
Date posted: September 13, 2007 ; Last revised: October 7, 2014
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