Corporate lobbying over business cycles

32 Pages Posted: 14 Nov 2021

See all articles by Wei-Fong Pan

Wei-Fong Pan

Department of Economics, University of Reading

Date Written: August 11, 2020

Abstract

This study investigates how firms’ lobbying activities change over business cycles. We show that firms lobby more during recessions. Aside from active lobbying firms, non-lobbying firms are also more likely to start lobbying during recessions. Corporate lobbying generally responds only to aggregate economic fluctuations. Lastly, we discuss the benefits of lobbying and potential channel that lead to such countercyclicality. We show that firms which participate in lobbying are more likely to receive a subsidy from the federal government. We further find that executives have stronger motivation to lobby during recessions because doing so helps them obtain more personal compensation.

Keywords: Political lobbying, Business cycle, Rent seeking, CEO compensation

JEL Classification: D72, E32, G38

Suggested Citation

Pan, Wei-Fong, Corporate lobbying over business cycles (August 11, 2020). Available at SSRN: https://ssrn.com/abstract=3961149 or http://dx.doi.org/10.2139/ssrn.3961149

Wei-Fong Pan (Contact Author)

Department of Economics, University of Reading ( email )

Whiteknights
Reading, Berkshire RG6 6AH
United Kingdom

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