The CEO as chief political officer: Managerial discretion and corporate political activity

Michael Hadani, Nicolas M. Dahan and Jonathan P. Doh

Journal of Business Research, 2015, vol. 68, issue 11, 2330-2337

Abstract: Corporate political activity (CPA) is an important nonmarket strategy aimed at advancing a firm's interests by influencing public policy. Yet studies report mixed results as to the impact of CPA on firm outcomes. Building on recent extant research we suggest that one reason for the ambivalent evidence regarding the impact of CPA on firm performance is the moderating role of CEO discretion on the CPA-firm performance relationship. In a longitudinal study of S&P 1000 firms over 10years, we test competing perspectives regarding the moderating impact of CEO discretion on the CPA-corporate performance relationship. We find that some aspects of CEO discretion, in particular CEO duality, moderate the relationship between CPA and performance. The findings provide some support for an agency view of the impact of CEO discretion the CPA-performance relationships, which carry implications for both scholarship and regulation in the areas of CPA and corporate governance.

Keywords: Corporate political activity; CEO discretion; Firm performance; Agency theory; Stewardship; Corporate governance (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:68:y:2015:i:11:p:2330-2337

DOI: 10.1016/j.jbusres.2015.03.046

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