Do Campaign Contributions and Lobbying Expenditures by Firms Create “Political” Capital?

Philip Hersch (), Jeffry Netter () and Christopher Pope ()

Atlantic Economic Journal, 2008, vol. 36, issue 4, 395-405

Abstract: We examine the relation between a firm’s campaign contributions and lobbying expenditures and its Tobin’s q. We follow other studies that use q to measure the value of the firm’s intangible capital (e.g., the value of advertising, R&D, or environmental performance). Researchers have found a positive and significant relation between intangible assets and q. If political capital exists, it is an intangible asset. However, we find little relation between q and political contributions, suggesting that campaign contributions may not have long term effects on political markets. This is consistent with the view that contributions are done by firms as a response to a short term opportunity not as a way of building long-term political capital. Copyright International Atlantic Economic Society 2008

Keywords: Political contributions; Lobbying expenditures; Tobin’s q; Political capital; D21; D72; G30; G31; G38 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s11293-008-9125-y

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