The Role of Corporate Political Strategies in M&As

70 Pages Posted: 21 Sep 2014 Last revised: 21 Jan 2017

See all articles by Ettore Croci

Ettore Croci

Catholic University of the Sacred Heart of Milan

Christos Pantzalis

University of South Florida

Jung Chul Park

University of South Florida

Dimitris Petmezas

University of Surrey - Surrey Business School

Date Written: January 19, 2017

Abstract

In line with the view that politics can complicate M&A deals, we find that firms contributing to political action committees or involved in lobbying are less likely to be acquired and their takeover process is lengthier. As we empirically show, this can be explained by the fact that politicians have motives to interfere with the takeover process due to career concerns, in terms of getting re-elected and raising funds for future campaigns. We also document that politically connected target firms command higher takeover premiums from bidders lacking political expertise, consistent with the notion that the market regards target firms’ connections, not easily replicable by bidders, as means to enhance growth opportunities of the merged firm.

Keywords: PAC contributions; lobbying activities; mergers and acquisitions; acquisition probability; time to completion; takeover premium

JEL Classification: G34, G1, H1

Suggested Citation

Croci, Ettore and Pantzalis, Christos and Park, Jung Chul and Petmezas, Dimitris, The Role of Corporate Political Strategies in M&As (January 19, 2017). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2499048 or http://dx.doi.org/10.2139/ssrn.2499048

Ettore Croci

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Christos Pantzalis

University of South Florida ( email )

Tampa, FL 33620-5500
United States
(813) 974-3262 (Phone)

Jung Chul Park

University of South Florida ( email )

Tampa, FL 33620
United States
813-974-9680 (Phone)
813-974-3084 (Fax)

HOME PAGE: http://www.usf.edu/business/contacts/park-jung-chul.aspx

Dimitris Petmezas (Contact Author)

University of Surrey - Surrey Business School ( email )

Guildford, Surrey GU2 7XH
United Kingdom

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