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

Ahmed W. Alam, Ashupta Farjana and Reza Houston

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: 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.

Keywords: Geopolitical risk; Corporate lobbying; CEO power; Firm performance; Stewardship theory (search for similar items in EconPapers)
JEL-codes: D72 D81 G30 M12 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001570

DOI: 10.1016/j.frl.2024.105127

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