The Impact of Lobbying on Managerial Short-Term Resource Adjustment Decisions

56 Pages Posted: 8 Apr 2022 Last revised: 14 May 2024

See all articles by Johannes Voshaar

Johannes Voshaar

University of Bremen - Faculty of Business Studies and Economics - Chair of Accounting and Control; John Molson School of Business, Concordia University

Thomas R. Loy

University of Bremen

Jochen Zimmermann

University of Bremen - Faculty of Business Studies and Economics; University of Bremen - Chair of Accounting and Control

Date Written: December 21, 2023

Abstract

This study examines the effect of political lobbying on firms' short-term resource adjustment decisions. Controlling for a wide range of known determinants of managerial cost behaviour, our results suggest that U.S. lobbying firms exhibit significantly less cost stickiness than non-lobbying firms. Lobbying reduces managers' "wait-and-see games" as they obtain preferential access to information on political and legislative processes. With early knowledge of impending (political and regulatory) threats and long-lasting downturns, managers can adjust unutilised capacity more swiftly. This effect is more pronounced for firms without alternative information channels like permanent exchange with regulators. Our findings hold for several robustness checks, for instance, controlling for potential sample selection bias or employing alternative measures of lobbying as well as (political) uncertainty and alternative samples.

Keywords: cost behaviour, cost stickiness, lobbying, political connections, resource adjustment

JEL Classification: D8, D72, M40, M41

Suggested Citation

Voshaar, Johannes and Loy, Thomas R. and Zimmermann, Jochen and Zimmermann, Jochen, The Impact of Lobbying on Managerial Short-Term Resource Adjustment Decisions (December 21, 2023). British Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4068981 or http://dx.doi.org/10.2139/ssrn.4068981

Johannes Voshaar (Contact Author)

University of Bremen - Faculty of Business Studies and Economics - Chair of Accounting and Control ( email )

Bremen, D-28359
Germany

John Molson School of Business, Concordia University ( email )

Montreal
Canada

Thomas R. Loy

University of Bremen ( email )

Universitaetsallee GW I
Bremen, D-28334
Germany

Jochen Zimmermann

University of Bremen - Faculty of Business Studies and Economics ( email )

Hochschulring 4
Germany
+49 421 218 9121 (Phone)

University of Bremen - Chair of Accounting and Control ( email )

Universitaetsallee GW I
Bremen, D-28334
Germany
+49 421 218-9119 (Phone)

HOME PAGE: http://www.controlling.uni-bremen.de

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