Corporate Lobbying Research Articles

When the well is full, it will run over: the double-edged sword effect of corporate lobbying activities on firm performance

When the well is full, it will run over: the double-edged sword effect of corporate lobbying activities on firm performance

Corporate Lobbying in the EU: Winners and Losers

Corporate Lobbying in the EU: Winners and Losers

Firm-level political uncertainty, corporate lobbying and risk-taking

Prior research shows that political uncertainty affects general economic and firm-related outcomes. However, little is known about how firm-specific political uncertainty is related to corporate risk-taking. Taking advantage of a recent construct and using a large sample of non-financial U.S. firms covering the period between 2002 and 2021, we find compelling evidence that firm-specific political uncertainty is positively related to corporate risk-taking, especially for larger firms. On average, a one standard deviation rise in the level of political risk at the firm-level results in a 2.53% increase in risk-taking. Further analysis shows that the impact of firm-level political uncertainty on corporate risk-taking is more pronounced for firms that spend more on corporate lobbying. Our results are significant and robust to alternative risk-taking measures and endogeneity tests.

Informational lobbying, information asymmetry, and the adoption of the ride-hailing model policy in the U.S. States

AbstractExisting research on lobbying has predominantly focused on its material returns, such as equity returns, stock prices, and government contracts while overlooking its informational impact. This paper addresses this gap by investigating to what extent and under what conditions policymakers assimilate information delivered through corporate lobbying. Drawing on an informational perspective, it proposes that the informational effect of lobbying is moderated by the information asymmetry between policymakers and firms. Focusing on the U.S. ride-hailing industry, this study utilizes a unique dataset on U.S. state legislatures’ adoption of the model policy lobbied by ride-hailing companies. The results reveal that the informational impact of corporate lobbying is highly contingent upon the presence of information asymmetry between policymakers and firms, which can be attributed to policymakers’ resources for independent information gathering, information deliberation through public hearings or media discussions, and countervailing lobbying efforts.

Business politics is usually about attempts to exert influence rather than power evidence from Australia

AbstractWe argue that the everyday language distinction drawn between power and influence is meaningful and significant. There is good reason to believe that much corporate lobbying activity which is currently described under the heading of business power is better understood as attempts to secure negotiated agreements based on exerting influence rather than power and that the latter is usually used only when attempts to use influence have failed. We develop an analytical distinction between influence, understood as successful efforts at persuasion, and power using Keith Dowding’s work on power. Drawing upon findings from interviews with corporate professionals operating at the coalface of business and government interaction in Australia, we show that lobbyists generally seek “quiet” behind-the-scenes accommodations with governments via attempts to exert influence rather than power.

Geopolitical risk, CEO power, and corporate lobbying: Do powerful CEOs lobby more?

We offer fresh empirical evidence on the impact of geopolitical risk (GPR) on corporate lobbying behavior. Using a US sample, we show that firms, on average, scale down their lobbying expenditures when global and US-specific GPR increase. Geopolitical acts have a more negative impact than geopolitical threats. These outcomes remain resilient after controlling for firm-level political action committee (PAC) campaign contributions. Utilizing matched samples, we further show that CEO power moderates this effect, implying that firms with powerful CEOs lobby more when geopolitical risks are high. Finally, we demonstrate that firms with powerful CEOs that intensify their lobbying efforts exhibit stronger financial performance during geopolitical crises. Our findings are consistent with the stewardship perspective of CEO behavior.

Import Competition and Investment in Corporate Lobbying

Import Competition and Investment in Corporate Lobbying

Firm-Level Political Uncertainty, Corporate Lobbying and Risk-Taking

Firm-Level Political Uncertainty, Corporate Lobbying and Risk-Taking

«БЕЗПЕЧНА ГАВАНЬ» У ПРОЄКТІ ДИРЕКТИВИ ЄВРОПЕЙСЬКОГО СОЮЗУ ПРО НАЛЕЖНУ ОБАЧНІСТЬ ЩОДО КОРПОРАТИВНОЇ СТАЛОСТІ

Over the last decade, the mandatory legislation that requires large companies to conduct due diligence for the social, environmental, and ethical risks within their economic activities and to manage those risks efficiently has been rapidly expanding across Europe. On 23 February 2022 the European Commission unveiled a proposal for a Directive on corporate sustainability due diligence. Following numerous amendments adopted by the European Parliament on 1 June 2023, the proposal now enters negotiations with the EU Council and member states for further refinement. The proposal introduces mandatory human rights and environmental due diligence (mHREDD) which establishes provisions for corporate liability when companies meeting the employee number and turnover criteria specified in the proposal fail to adhere to due diligence obligations, causing otherwise avoidable harm. The adoption of mHREDD transforms the prevention of harmful impacts on human rights and the environment from a voluntary practice of companies into a normative standard of their conduct. Therefore, compliance with the Directive's requirements will become part of a company's compliance as an internal process aimed at ensuring adherence to existing norms and rules. A large proportion of companies targeted by the proposal, while appearing cooperative, seek to weaken the future rules through the corporate lobbying. Among the tactics used to undermine the law is lobbying the so-called “safe harbour” exemption. With a “safe harbour” exemption, the legislature sets out criteria that, if met, could exclude liability and the corresponding ability of claimants to bring action. In the context of the proposal of the Directive “safe harbour” means that a company shall be released from all legal actions upon proof that it had carried out a legally valid due diligence assessment. Safe harbour exemption is contrasted with the use of due diligence as a procedural defence, which the defendant company can plead and seek to prove in court. The proposal’s implications are important for Ukraine considering its status as a candidate country for EU membership. Ukrainian companies, unlike those in the EU countries, lack experience of operating within the framework of corporate social responsibility and non-financial reporting to build upon, and the culture of corporate sustainability is in its nascence. A “safe harbour” approach, under which when the company has seemingly complied with the due diligence process (which might be a mere “tick-box exercise”), it will not be held liable for the harmful effects of its activities, will have devastating impact for the development of corporate sustainability tradition in Ukraine.

Liberalization for Sale: Corporate Demands and Lobbying over FTAs

Firm-based approaches to international trade have revolutionized the study of trade politics. Corporate participation in political processes is costly, limiting access to large, productive, well-resourced, and often internationally engaged firms. This implies a pro-trade bias in corporate lobbying demands over trade policy. I examine this relationship in the case of three free trade agreements passed by the United States Congress in 2011. I combine public statements from firms on the FTAs with corporate lobbying activities and find that both lobbying firms and those that lobbied and publicly disclosed their policy positions were more productive than the typical publicly traded firm. Likewise, firms with income from foreign affiliates were more likely to be politically active than others. These results contribute to a vibrant body of research into the complex relationships firms hold with policies governing access to international markets.

Corporate lobbying and firm performance variability

This paper is the first to provide empirical evidence that higher lobbying expenditures are associated with higher operational performance variability. Using data from S&P1500 firms over the 2000–2020 period, our estimates indicate a positive relationship between lobbying expenditures and the variability of return on asset and return on equity. Addressing the endogeneity concerns by applying a control function approach, we find results consistent with the view that the management of lobbying firms takes riskier investment decisions.

Organizational Stigma, Corporate Lobbying, and the Nonmarket Boundaries of the Firm

Organizational Stigma, Corporate Lobbying, and the Nonmarket Boundaries of the Firm

The effects of lobbying on the FDA’s recall classification

BackgroundThe US Food and Drug Administration (FDA) regulates goods accounting for 20% of US consumers’ total expenditure. The agency’s potential susceptibility to corporate lobbying and political influence may adversely affect the its abilities to fulfill its duties as a vital federal agency. This study assesses whether the FDA’s product recall classifications in recall scenarios are influenced by firms’ lobbying activities.MethodsThe universe of all FDA recalls between 2012 and 2019 is obtained from the FDA’s website. Firm names are matched to federal-level lobbying data obtained from the Center for Responsive Politics – a non-profit and nonpartisan organization that tracks lobbying expenditures and campaign contributions. Analyses are conducted using ordinary-least-squares regressions, in which the dependent variable is recall classification and independent variables are three different measures of firms’ lobbying activities in the one year prior to the recall.ResultsFirms that engage in lobbying appear more likely to receive favourable classifications from the FDA. When examining the above results by product type, we find that classification of food recalls seems to be subject to lobbying influence, but the same does not appear to be true for drug and device recalls. Evidence is consistent with the conjecture that the distinction between medical and food firms may be a result of medical firms targeting lobbying efforts at FDA approvals, rather than recalls.ConclusionsBetween 2012 and 2019, the FDA’s product recall classifications seem to be significantly influenced by firms’ lobbying activities. Lobbying firms appear to have received more favorable (i.e., less severe) recall classifications compared to non-lobbying firms.

Corporate Lobbying and ESG Reports: Patterns among US Companies, 1999–2017

AbstractTo lobby legislators, it is important for interest groups to signal their ability to help legislators win elections and provide them with policy-relevant information. We explore for-profit companies’ use of environmental, social, and governance (ESG) reports as a signaling device to promote their reputation to legislators and convey their ability to provide electoral and policymaking support, which is valuable for lobbying. To this end, we create a panel dataset by combining ESG reports issued by US companies and the same companies’ lobbying and campaign contribution records from 1999 to 2017. We expect companies to issue more ESG reports, as well as reports containing more quantitative content, when they lobby. The data conform to our expectations. We also reason that lobbying may be more strongly related to ESG reporting when it is coupled with campaign contributions made by affiliated corporate political action committees, but the data do not support this expectation.

Follow the Money

Abstract I study, both empirically and theoretically, the economic and financial consequences of corporate lobbying. Firms lobby politicians to increase their share of government contracts, but political competition creates firm-level risk, inflating their cost of capital and reducing their incentive to invest in research and development (R&D). I document an annual 6–8% return premium for stocks of high-lobbying firms, which compensates investors for political risk. An estimated model in which firms can lobby and innovate and investors are risk averse replicates key features of corporate lobbying in the U.S., including the well-established paradox that lobbying contributions are small relative to the policies at stake. The model predicts that if investors ceased seeking compensation for political risk, R&D investment would increase by 6% and the innovation rate by 0.4% points. The risk-premium costs of lobbying are quantitatively and economically important even if the resources “wasted” on lobbying are objectively small.

The Impact of Public Service Advertising: Social Development or Social Change through Development Communication: Strategic Communication through Corporate Lobbying: An Analysis of the Changing Dynamics from Print to Digital Media

The term 'public service advertising', although familiar to all of us, has never been exposed to critical analysis in India till 2000 onwards as the growing popularity and inescapability of media messages through advertising has reached to a crescendo during the times of a transition from one-dimensional print media to digital media. And in this process of change-over, the intent of 'public service' which means to mobilize the public to take action for a common goal or objective, has got affected. Public service advertising with all ennobled and embellished connotations, catalyzing social change or transformation is nothing new. However, the problem arises when under the garb of 'public service' the centers of power, media elites or communication strategists, try to propagate their own world views through constantly bombarded different social media platforms, the grey areas of borderline between public service or public good and personal interest and personal benefit get obliterated. This research study will try to highlight the issues of propagandist intent of public service advertising and how the ideals of social change or social development through development communication strategies is taking a drastic turn towards forging a mass consensus on false assertion and fake identity. The article has used quantitative analysis methodology to analyze the various understanding of the concept of 'public service advertising' and for that matter, social media platforms like YouTube, Instagram are used as its variables for analysis. The sample size used for this study is 150 respondents. The study has concluded from the detailed analysis that the alarming scenario of diluting the phenomena of 'public good or public service' has created a huge propensity towards creating a hegemony, ie, self-glorification or self propaganda and the 'social development' intent of the social messages or public service messages is getting diluted because of the growth of strategic communication interfaces or equipped professional elites working as political actors.

Life after Whitehall: The career moves of British special advisers

The article examines the post-government career moves of 521 former British special advisers who served from 1997 to 2017. Analysis of an original dataset mapping the first job each special adviser ‘landed-in’ after leaving government shows the vast majority land in corporate lobbying and policy advocacy roles. A minority become politicians, although many continue to work in political organisations. The least popular choice is public service. The findings challenge the ‘lure of power’ hypothesis and lend weight to increasing concerns about former political staff revolving to shadow lobbying. The findings point to potential lobbying regulation loopholes first raised by the UK Committee of Standards in Public Life. A multi-nominal logistic regression shows how party affiliation and occupational path dependency constrain career moves. Labour special advisers are less likely to become corporate lobbyists than Conservative and Liberal Democrat ones. Special advisers also tend to revolve back to similar professional roles held before an appointment.

LOBBYING AGAINST DEMOCRACY

This essay seeks toexcavate the anti democratic propensities of corporate lobbying. Itbegins by considering th e nature of lobbying and then attempts to comprehend therelationship between corporate lobbying and democracy in terms of Crouch ’s theory ofpost democracy. The political culture of post democracy is blatantly corporatist andpromotes the anti democratic proclivities of the corporate lobby by providing readyopportunities for non transparent lobby ing . Cohen Eliya & Hammer classify nontransparent lobbying as a n index of the failure of the democratic process. The essayapplies the typology developed by them to Germany as a case study of anti democraticcorporate lobbying in action. It concludes by consider ing regulation and criminalisationas two possible remed ies for the anti democratic transgressions of non transparentcorporate lobbying. The former is explored by way of an analysis of t he regulatoryregimes of Germany and the USA ; the latter by considering non transparent corporatelobbying as a homologue of the crime of corruption.

Corporate lobbying: Resource-seeking or rent-seeking? Evidence from audit fees

Theory and prior research suggest that corporate lobbying is a primary means that corporations use to influence government policies either for improving firm performance (i.e., strategic decisions) or for rent-seeking activities (i.e., agency costs) but the evidence between lobbying activities and auditor assessments of audit risk remains unclear. Our results show that lobbying firms are associated with higher audit risks and fees, consistent with the idea that lobbying is related to rent-seeking and higher agency costs. In cross-sectional analyses, we find that the positive association between lobbying and audit fees is weaker for firms with strong corporate governance. Further analysis shows that firm financial returns or low earnings quality mediate the relationship between lobbying and audit fees. The results suggest that practitioners, users of financial statements and regulators could benefit by recognizing that lobbying activities could signal managerial opportunistic behavior.

Specializing in Politics: Effects of Specialization, Social Capital, and Human Capital on Corporate Lobbying

ABSTRACT Corporate lobbyists play a vital role in the Corporate Political Activity process. They act as a mediator between corporations and politicians when firms engage in lobbying activities. Firms value professional lobbyists for their connections in Washington and their knowledge of the political process. While previous Corporate Political Activity research on lobbying has focused primarily on the amount of money firms spend on lobbying, including antecedents of lobbying and outcomes, very little research has examined lobbyists’ individual differences and how those influence important outcomes. In this paper, we examine how lobbyists’ specialization and experience as both a lobbyist and a former politician can influence the number of bills lobbied on passed into law. Using a sample of corporate lobbyists who were hired by S&P 500 firms, we look at 8,630 lobbyist’s careers from 2005–2016. We find that lobbyists lower in specialization are more likely to lobby on bills which are eventually passed into law than highly specialized lobbyists. We also find that social capital moderates the relationship between specialization and lobbying effectiveness. These results suggest that while corporate political activity spending is important, both scholars and firms should also understand who firms are hiring to lobby for them and how differences in lobbyist specialization might influence firm effectiveness in the nonmarket arena.