Tug of War in Corporate Environmental Lobbying

60 Pages Posted: 24 Jan 2023 Last revised: 20 Mar 2024

See all articles by Byeong-Je An

Byeong-Je An

San Diego State University - Finance Department

Hyun-Soo Choi

College of Business, Korea Advanced Institute of Science and Technology (KAIST)

Hugh Hoikwang Kim

University of South Carolina, Darla Moore School of Business

Paul Youngwook Kim

College of Business, Korea Advanced Institute of Science and Technology (KAIST)

Date Written: January 20, 2023

Abstract

We investigate how firms with opposing environmental stances can engage in political competition to influence policymakers' decisions through lobbying and examine the resulting impacts. Our theoretical model predicts that these firms end up spending more on lobbying due to the political competition, especially when the environmental policy uncertainty is higher. We empirically test the lobbying "tug of war" using U.S. corporate lobbying data. Importantly, excessive lobbying increases the cost of capital and decreases a firm's R&D investment and capital investment. Overall, our study highlights the hidden costs of intense lobbying competition among firms with opposing environmental stances.

Keywords: corporate lobbying, political competition, environmental policy, firm investment

JEL Classification: D72, G32, Q58

Suggested Citation

An, Byeong-Je and Choi, Hyun-Soo and Kim, Hugh Hoikwang and Kim, Paul Youngwook, Tug of War in Corporate Environmental Lobbying (January 20, 2023). Nanyang Business School Research Paper No. 23-03, KAIST College of Business Working Paper Series, Available at SSRN: https://ssrn.com/abstract=4332528 or http://dx.doi.org/10.2139/ssrn.4332528

Byeong-Je An

San Diego State University - Finance Department ( email )

5500 Campanile Drive
San Diego, CA 92182-8236
United States

Hyun-Soo Choi

College of Business, Korea Advanced Institute of Science and Technology (KAIST) ( email )

85 Hoegiro Dongdaemun-Gu
Seoul 02455
Korea, Republic of (South Korea)

Hugh Hoikwang Kim (Contact Author)

University of South Carolina, Darla Moore School of Business ( email )

1014 Greene Street
Columbia, SC 29208
United States

Paul Youngwook Kim

College of Business, Korea Advanced Institute of Science and Technology (KAIST) ( email )

85 Hoegiro Dongdaemun-Gu
Seoul 02455
Korea, Republic of (South Korea)

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