Long-Term Political Connections and the Returns to Corporate Lobbying

Elodie Andrieu and Olimpia Cutinelli-Rendina
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Elodie Andrieu: Paris School of Economics

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: How do firms build their political influence? We shed light on the complementarity between firms electoral campaign contributions and their lobbying activity through three stylized facts. Firms lobby committees where they have contributed to legislators' campaigns; contributions are highly persistent, even after committee reassignments; and firms follow reassigned legislators onto new lobbying topics. We exploit these facts to construct a shift-share instrument for lobbying expenditures in which political connections are defined by persistent campaign contributions and exposure is measured at the legislator-firm level through predetermined contribution shares. We validate the instrument by showing that reassignments have no effect on connected firms that do not lobby, and that future contributions carry no predictive power. Our IV estimates indicate that a 10 percent increase in lobbying raises sales by around 1.1 percent and capital expenditures by 1.4 percent for publicly traded U.S. firms over the period 2000-2016.

Keywords: lobbying; campaign contributions. (search for similar items in EconPapers)
JEL-codes: D72 L11 P40 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2026-05

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