Corporate lobbying and changes in financing or operating activities in reaction to FAS No. 8

Abstract

This study examines the relationship between corporate lobbying activities and changes in financing or operating activities in response to FAS No. 8. A chi square test indicates no significant relationship between the two reactions. The economic factors associated with lobbying, financing or operating changes, and both reactions together, are studied using t -tests and probit analysis. Lobbying positions in opposition to FAS No. 8 occurred when there were large proportions of remuneration as incentive compensation, greater leverage, larger asset size, and lower percentages of management's stock ownership. Only large size was related to the firm's decision to alter financing or operating activities to counteract the effect of FAS No. 8. Firms that both lobbied and changed financing or operating activities were characterized by greater leverage, larger asset size, and lower management stock ownership.