Corporate Political Obfuscation
31 Pages Posted: 27 Apr 2022
Date Written: April 18, 2022
Firms may be motivated to add noise to political processes to take advantage of policy complexity and politicians' limited rationality. We refer to this incentive as corporate political obfuscation and show that the degree of observable, equilibrium obfuscation depends on the competitiveness of an industry. We present a model that predicts a positive correlation between industry competitiveness and political obfuscation and test the main predictions using data on the ideological positions of corporate executives and directors. Evidence suggests that firms do engage in corporate political obfuscation and that obfuscation increases with the number of firms in an industry.
Keywords: Campaign contributions, corporate political activity, lobbying, mixed strategy, obfuscation
JEL Classification: D72, L19
Suggested Citation: Suggested Citation