Corporate lobbying and firm performance variability

Alexandre Girard, Jean-Yves Gnabo and Rodrigo Londoño van Rutten

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: 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.

Keywords: Firm performance variability; Firm performance volatility; Lobbying; Moral hazard (search for similar items in EconPapers)
JEL-codes: D72 G12 G28 G31 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008966

DOI: 10.1016/j.frl.2023.104524

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