Corporate Lobbying and Firm Performance

38 Pages Posted: 14 May 2015

See all articles by Hui Chen

Hui Chen

University of Zurich

David C. Parsley

Vanderbilt University – Finance and Economics

Ya-Wen Yang

Wake Forest University - Schools of Business

Multiple version iconThere are 2 versions of this paper

Date Written: April/May 2015

Abstract

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.

Keywords: corporate lobbying, accounting performance, market returns, portfolio, Citizens United

Suggested Citation

Chen, Hui and Parsley, David C. and Yang, Ya-Wen, Corporate Lobbying and Firm Performance (April/May 2015). Journal of Business Finance & Accounting, Vol. 42, Issue 3-4, pp. 444-481, 2015. Available at SSRN: https://ssrn.com/abstract=2605245 or http://dx.doi.org/10.1111/jbfa.12109

Hui Chen

University of Zurich ( email )

Plattenstrasse 14
Zurich, CH-8032
Switzerland

David C. Parsley (Contact Author)

Vanderbilt University – Finance and Economics ( email )

401 21st Avenue South
Nashville, TN 37203
United States
615-322-0649 (Phone)
615-343-7177 (Fax)

HOME PAGE: http://https://business.vanderbilt.edu/bio/david-parsley/

Ya-Wen Yang

Wake Forest University - Schools of Business ( email )

P.O. Box 7659
Winston-Salem, NC 27109-7285
United States
336-758-2934 (Phone)

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