Lobbying expenditures and sin stock market performance

Hatem H. Ghouma and Carissa S. Hewitt

Research in International Business and Finance, 2019, vol. 49, issue C, 176-190

Abstract: We examine the relationship between lobbying expenditures and the market performance for sin stocks. Considering the benefits of lobbying spending (such as receiving bailouts during economic crises, preferential tax rates, government contracts, and tariffs), we conjecture that sin stocks invest more in lobbying than non-sin stocks, and that this strategy leads to higher market performance. Using a sample of US listed sin stocks, we find strong evidence that firms in controversial industries spend more money in lobbying activities. Additionally, our findings suggest that lobbying sin stocks enjoy higher average (annualized) returns than non-lobbying sin stocks. Moreover, we find that these lobbying sin firms enjoy a higher return when compared to a benchmark of non-sin stocks.

Keywords: Sin stocks; Controversial industries; Lobbying; Stock market return; CSR (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:49:y:2019:i:c:p:176-190

DOI: 10.1016/j.ribaf.2019.03.006

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