Corporate Political Obfuscation

31 Pages Posted: 27 Apr 2022

See all articles by Adam Fremeth

Adam Fremeth

University of Western Ontario - Richard Ivey School of Business

Sorena Rahi

University of Western Ontario - Richard Ivey School of Business

Brandon Schaufele

University of Western Ontario - Richard Ivey School of Business

Date Written: April 18, 2022

Abstract

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

Fremeth, Adam and Rahi, Sorena and Schaufele, Brandon, Corporate Political Obfuscation (April 18, 2022). Available at SSRN: https://ssrn.com/abstract=4086878 or http://dx.doi.org/10.2139/ssrn.4086878

Adam Fremeth

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Sorena Rahi

University of Western Ontario - Richard Ivey School of Business ( email )

London, Ontario
Canada

Brandon Schaufele (Contact Author)

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

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