The Corporate Value of (Corrupt) Lobbying

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2014-08-18


Editor's Note: The following post comes to us from Alexander Borisov of the Department of Finance at the University of Cincinnati, and Eitan Goldman and Nandini Gupta, both of the Department of Finance at Indiana University.

Despite the fact that corporations and interest groups spent about $30 billion lobbying policy makers over the last decade (Center for Responsive Politics, 2012), there is a lack of robust empirical evidence on whether firms’ lobbying expenditures create value for their shareholders. Moreover, while the public perception of the lobbying process is that it involves unethical behavior that may bias rather than inform politicians, this is difficult to show since unethical practices are not typically observable. In our recent ECGI working paper, The Corporate Value of (Corrupt) Lobbying, we identify events that exogenously affect the ability of firms to lobby, and find that firms that lobby more experience a significant decrease in market value around these events. Investigating the channels by which lobbying may add value, we find evidence suggesting that the value partly arises from potentially unethical arrangements between firms and politicians.

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academic research corporate social responsibility empirical research securities litigation & enforcement alexander borisov anti-corruption compliance & ethics eitan goldman lobbying nandini gupta political spending sec enforcement shareholder value shocks


R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation,

Date tagged:

08/18/2014, 16:10

Date published:

08/18/2014, 08:51