In search of El Dorado: The elusive financial returns on corporate political investments

Strategic Management Journal

Volumn 34, Issue 2, 2013, Pages 165-181

  Hadani, Michael ^a   Schuler, Douglas A ^b  

^a LONG ISLAND UNIVERSITY   (United States)

^b RICE UNIVERSITY   (United States)

Author keywords

agency theory; corporate political activity; financial performance; political service; regulation

Indexed keywords

AGENCY THEORY; FINANCIAL PERFORMANCE; POLITICAL ACTIVITY; POLITICAL SERVICE; REGULATION;

BROADCASTING; COMMERCE; INVESTMENTS; PROFITABILITY; PUBLIC UTILITIES;

SOCIAL SCIENCES;

EID: 84871713985     PISSN: 01432095     EISSN: 10970266     Source Type: Journal    
DOI: 10.1002/smj.2006     Document Type: Article

References (93)

1. Aggarwal RK, Meschke F, Wang TY,. 2011. Corporate political donations: investment or agency ? Business and Politics 14: 1469-3569.
2. Agrawal A, Knoeber CR,. 2001. Do some outside directors play a political role? Journal of Law and Economics 44: 179-198.
3. Allison GT,. 1971. Essence of Decision: Explaining the Cuban Missile Crisis. Little, Brown and Company: Boston, MA.
4. Ansolabehere SD, Snyder JM, Tripathi M,. 2002. Are PAC contributions and lobbying linked? New evidence from the 1995 Lobby Disclosure Act. Business and Politics 4: 131-155.
5. Ansolabehere SD, Snyder JM, Ueda M,. 2004. Did firms profit from soft money? Election Law Journal 3: 199-137.
6. Arlen J, Weiss D,. 1995. A political theory of corporate taxation. Yale Law Journal 105: 325-392.
7. Avery DR, Quinones MA,. 2002. Disentangling the effects of voice: the incremental roles of opportunity, behavior, and instrumentality in predicting procedural fairness. Journal of Applied Psychology 87: 81-86.
8. Baltagi BH, Chang Y,. 1994. Incomplete panels: a comparative study of alternative estimators for the unbalanced one-way error component regression model. Journal of Econometrics 62: 67-89.
9. Baron DP,. 1995. Integrated strategy: market and nonmarket components. California Management Review 37: 47-65.
10. Baumgartner FR, Berry JM, Hojnacki M, Kimball DC, Leech BL,. 2009. Lobbying and Policy Change: Who Wins, Who Loses, and Why? University of Chicago Press: Chicago, IL.
11. Bellamy SL, Li Y, Ryan LM, Lipsitz S, Canner MJ, Wright R,. 2004. Analysis of clustered and interval censored data from a community-based study in asthma. Statistics in Medicine 23: 3607-3621.
12. Bhagwati JN,. 1982. Directly unproductive profit-seeking activities. Journal of Political Economy 90: 988-1002.
13. Bhuyan S,. 2000. Corporate political activities and oligopoly welfare loss. Review of Industrial Organization 17 (4): 411-426.
14. Blumentritt TP,. 2003. Foreign subsidiaries' government affairs activities: the influence of managers and resources. Business and Society 42: 202-233.
15. Bonardi JP,. 2008. The internal limits to firms' nonmarket activities. European Management Review 5: 165-174.
16. Bonardi JP, Hillman AJ, Keim GD,. 2005. The attractiveness of political markets: implications for firm strategy. Academy of Management Review 30: 397-413.
17. Bonardi JP, Holburn G, Vanden Bergh RG,. 2006. Nonmarket strategy performance: evidence from U.S. electric utilities. Academy of Management Journal 49 (6): 1209-1228.
18. Bouwen P,. 2002. Corporate lobbying in the European Union: the logic of access. Journal of European Public Policy 9: 365-390.
19. Burris V,. 2005. Interlocking directorates and political cohesion among corporate elites. American Journal of Sociology 111: 249-283.
20. Campaign Legal Center. 2010. Brief Amici Curiae of Campaign Legal Center, Democracy 21, Common Cause, US PIRG, Americans for Campaign Reform, League of United Latin American Citizens, Asian American Legal Defense and Education Fund in Support of Appellee on Supplemental Question. On Appeal from the U.S. District Court for the District of Columbia. 08-205.
21. Caves R,. 1964. American Industry: Structure, Conduct, Performance. Prentice-Hall: Englewood Cliffs, NJ.
22. Center for Responsive Politics. 2011. www.opensecrets.org. (12 January 2011).
23. Chaney P, Faccio M, Parsley DC,. 2010. The quality of accounting information in politically connected firms. SSRN working paper. Available at http: papers.ssrn.com/sol3/papers.cfm?abstract-id=966379 (28 June 2012).
24. Cho CH, Patten DM, Roberts RW,. 2006. Corporate political strategy: an examination of the relation between political expenditures, environmental performance, and environmental disclosure. Journal of Business Ethics 67: 139-154.
25. Clawson D, Neustadtl A, Weller M,. 1998. Dollars and Votes: How Business Campaign Contributions Subvert Democracy. Temple University Press: Philadelphia, PA.
26. Coates JC IV,. 2010. Corporate governance and corporate political activity: what effect will Citizens United have on shareholder wealth? Harvard Law School, Discussion Paper No. 684, Harvard University: Cambridge, MA. Available at http://ssrn.com/abstract=1680861 (28 June 2012).
27. Coates JC IV,. 2012. Corporate politics, governance, and value before and after Citizens United. Harvard Law School, Working Papers Series. Available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1975421 (28 June 2012).
28. Colman A,. 1982. Game Theory and Experimental Games: The Study of Strategic Interaction. Pergamon Press: New York.
29. Cooper MJ, Gulen H, Ovtchnikov A,. 2010. Corporate political contributions and stock returns. Journal of Finance 65: 687-724.
30. Core J, Guay W,. 1999. The use of equity grants to manage optimal equity incentive levels. Journal of Accounting and Economics 28: 151-84.
31. Cyert RM, March JG,. 1963. A Behavioral Theory of the Firm. Prentice-Hall: Englewood Cliffs, NJ.
32. Dahan N,. 2005. Can there be a resource-based view of politics? International Journal of Management and Organization 35: 8-27.
33. Dean TJ, Vryza M, Fryxell GE,. 1998. Do corporate PACs restrict competition? An empirical examination of industry PAC contributions and entry. Business and Society 37: 135-156.
34. de Figueiredo JM, Silverman BS,. 2006. Academic earmarks and the returns to lobbying. Journal of Law and Economics 49 (2): 597-626.
35. Dreiling M, Darves D,. 2011. Corporate unity in American trade policy: a network analysis of corporate-dyad political action. American Journal of Sociology 116: 1514-63.
36. Epstein EM,. 1969. The Corporation in American Politics. Prentice-Hall: Englewood Cliffs, NJ.
37. Esty DC, Caves RE,. 1983. Market structure and political influence: new data on political expenditures, activity, and success. Economic Inquiry 21 (1): 24-38.
38. Faccio M,. 2006. Politically connected firms. American Economic Review 96 (1): 369-386.
39. Faccio M, Masulis RW, McConnell JJ,. 2006. Political connections and corporate bailouts. Journal of Finance 61: 2597-2635.
40. Foster EM, McLanahan S,. 1996. An illustration of the use of instrumental variables: do neighborhood conditions affect a young person's chance of finishing high school ? Psychological Methods 3: 249-260.
41. Furlong Sr,. 2005. Exploring interest group participation in executive policymaking. In The Interest-Group Connection, Herrnson P, Shaiko R, Wilcox C, (eds). CQ Press: Washington, DC; 282-297.
42. Godwin RK, Seldon BJ,. 2002. What corporations really want from government: the public provision of private goods. In Interest Group Politics, Cigler AJ, Loomis BA, (eds). CQ Press: Washington: DC; 205-225.
43. Goldman E, Rocholl J, So I,. 2009. Do politically connected boards affect firm value? Review of Financial Studies 22 (6): 2331-2360.
44. Gray V, Lowery D,. 1997. Reconceptualizing PAC formation: it's not a collective action problem, and it may be an arms race. American Politics Research 25: 319-346.
45. Grenzke JM,. 1989. Shopping in the congressional supermarket: the currency is complex. American Journal of Political Science 33: 1-34.
46. Grier KB, Munger MC, Roberts BE,. 1994. The determinants of industrial political activity, 1978-1986. American Political Science Review 88: 911-926.
47. Hadani M,. 2012. Institutional ownership monitoring and corporate political activity: governance implications. Journal of Business Research 65 (7): 944-950.
48. Hall RL, Wayman FW,. 1990. Buying time: moneyed interests and the mobilization of bias in congressional committees. American Political Science Review 84: 797-820.
49. Hansen JM,. 1991. Gaining Access: Congress and the Farm Lobby, 1919-1981. University of Chicago Press: Chicago, IL.
50. Hansen W, Mitchell N,. 2000. Disaggregating and explaining corporate political activity: domestic and foreign corporations in national politics. American Political Science Review 94: 891-903.
51. Hardy MA,. 1993. Regression with Dummy Variables (Quantitative Applications in the Social Sciences). Sage: Newbury Park, CA.
52. Hart DM,. 2004. Business is not an interest group: on the study of companies in American national politics. Annual Review of Political Science 7: 47-69.
53. Hausman JA,. 1978. Specification tests in econometrics. Econometrica 46: 1251-1271.
54. Hersch P, Netter JM, Pope D,. 2008. Do campaign contributions and lobbying expenditures by firms create 'political' capital? Atlantic Economic Journal 36: 395-405.
55. Hillman AJ,. 2005. Politicians on the board of directors: do connections affect the bottom line? Journal of Management 31: 464-485.
56. Hillman AJ, Hitt M,. 1999. Corporate political strategy formulation: a model of approach, participation, and strategy decisions. Academy of Management Review 24: 825-842.
57. Hillman AJ, Keim GD, Schuler DA,. 2004. Corporate political activity: a review and research agenda. Journal of Management 30: 837-857.
58. Hillman AJ, Zardkoohi A, Bierman L,. 1999. Corporate political strategies and firm performance: indications of firm-specific benefits from personal service in the U.S. government. Strategic Management Journal 20 (1): 67-81.
59. Igan D, Mishra P, Tressel T,. 2009. A fistful of dollars: lobbying and the financial crisis. IMF working paper. Available at: www.imf.org/external/ pubs/ft/wp/2009/wp09287.pdf. (28 June 2012).
60. Kersh R,. 2002. Corporate lobbyists as political actors: a view from the field. In Interest Group Politics, Cigler AJ, Loomis BA, (eds). CQ Press: Washington, DC; 225-247.
61. Kleindl B,. 1999. A game theoretic perspective on market-oriented versus innovative strategic choice. Journal of Strategic Marketing 7: 265-274.
62. Kollman K,. 1998. Outside Lobbying: Public Opinion and Interest Group Strategies. Princeton University Press: Princeton, NJ.
63. Kroszner RS, Stratmann T,. 2005. Corporate campaign contributions, repeat giving, and the rewards to legislator reputation. Journal of Law and Economics 48 (1): 41-71.
64. Lee SE, Baik YS,. 2010. Corporate lobbying in antidumping cases: looking into the Continued Dumping and Subsidy Offset Act. Journal of Business Ethics 96: 467-478.
65. Lenway SA, Jacobson CK, Goldstein J,. 1990. To lobby or to petition: the political environment of U.S. trade policy. Journal of Management 16 (1): 119-134.
66. Lenway SA, Schuler DA,. 1991. The determinants of corporate political involvement in trade protection: the case of the steel industry. In Empirical Studies of Commercial Policy, Baldwin RE, (ed). National Bureau of Economic Research Conference Report. University of Chicago Press: Chicago, IL; 75-105.
67. Lester RH, Hillman A, Zardkoohi A, Cannella AA,. 2008. Former government officials as outside directors: the role of human and social capital. Academy of Management Journal 51 (5): 999-1013.
68. Liptak A,. 2010. Justices, 5-4, reject corporate spending limit. New York Times 21 January: A1.
69. Littell RC, Henry PR, Ammerman CB,. 1998. Statistical analysis of repeated measures data using SAS procedures. Journal of Animal Science 76: 1216-1231.
70. March JG,. 1994. A Primer on Decision Making: How Decisions Happen. Free Press: New York.
71. Masters MF, Keim GD,. 1985. Determinants of PAC participation among large corporations. Journal of Politics 47: 1158-1173.
72. McKay A, Webb-Yackee SW,. 2007. Interest group competition on federal agency rules. American Politics Research 35: 336-357.
73. Meznar M, Nigh D,. 1995. Buffer or bridge? Environmental and organizational determinants of public affairs activities in American firms. Academy of Management Journal 38: 975-997.
74. Mizruchi MS,. 1992. The Structure of Corporate Political Action: Interfirm Relationships and Their Consequences. Harvard University Press: Cambridge, MA.
75. Moore RT, Giovinazzo CT,. 2011. The distortion gap: policymaking under federalism and interest group capture. Publius: Journal of Federalism 42: 1-22.
76. Oliver C, Holzinger I,. 2008. The effectiveness of strategic political management: a dynamic capabilities framework. Academy of Management Review 33: 496-520.
77. Olson M,. 1965. The Logic of Collective Action: Public Goods and the Theory of Groups. Harvard University Press: Cambridge, MA.
78. Peltzman S,. 1976. Toward a more general theory of regulation. Journal of Law and Economics 19: 211-240.
79. Rose NL,. 1985. The incidence of regulatory rents in the motor carrier industry. RAND Journal of Economics 16: 299-318.
80. Schuler DA, Rehbein K, Cramer RD,. 2002. Pursuing strategic advantage through political means: a multivariate approach. Academy of Management Journal 45: 659-672.
81. Searle S, Casella G, McCulloch C,. 1992. Variance Components. Wiley: New York.
82. Shaffer B, Quasney TJ, Grimm CM,. 2000. Firm level performance implications of non market actions. Business and Society 39: 126-143.
83. Singer JD,. 1998. Using SAS PROC MIXED to fit multilevel models, hierarchical models, and individual growth models. Journal of Educational and Behavioral Statistics 24: 323-355.
84. Smith MA,. 2000. American Business and Political Power: Public Opinion, Elections, and Democracy. University of Chicago Press: Chicago, IL.
85. Snijders TAB, Bosker R,. 1999. Multilevel Analysis: An Introduction to Basic and Advanced Multilevel Modeling. Sage: Thousand Oaks, CA.
86. Snyder JM Jr,. 1992. Long-term investing in politicians; or, give early, give often. Journal of Law and Economics 35: 15-43.
87. Stigler G,. 1971. The theory of economic regulation. Bell Journal of Economics and Management Science 2: 3-21.
88. Stratmann T,. 2002. Can special interests buy congressional votes? Evidence from financial services legislation. Journal of Law and Economics 45: 345-374.
89. Useem M,. 1984. The Inner Circle: Large Corporations and the Rise of Business Political Activity in the U.S. and U.K. Oxford University Press: New York.
90. Vietor R,. 1994. Contrived Competition: Regulation and Deregulation in America. Harvard University Press: Cambridge, MA.
91. Witko C,. 2005. Measuring the stringency of state campaign finance regulation. State Politics & Policy Quarterly 5: 295-310.
92. Wooldridge JM,. 2002. Econometric Analysis of Cross Section and Panel Data. MIT Press: Cambridge, MA.
93. Yu F, Yu X,. 2011. Corporate lobbying and fraud detection. Journal of Financial and Quantitative Analysis 46: 1865-1891.