Journal
STRATEGIC MANAGEMENT JOURNAL
Volume 34, Issue 2, Pages 165-181Publisher
WILEY
DOI: 10.1002/smj.2006
Keywords
corporate political activity; regulation; agency theory; political service; financial performance
Categories
Ask authors/readers for more resources
Although many believe that companies' political activities improve their bottom line, empirical studies have not consistently borne this out. We investigate the relationship between corporate political activity (CPA) and financial returns on a set of 943 S&P 1500 firms between 1998 to 2008. We find that firms' political investments are negatively associated with market performance and cumulative political investments worsen both market and accounting performance. Firms placing former public officials on their boards experienced inferior market performance and similar accounting performance than firms without such board members. We find, however, that CPA is positively associated with market performance for firms in regulated industries. Our results challenge the profit-maximizing assumptions underlying CPA research and focus on agency theory to better understand CPA. Copyright (c) 2012 John Wiley & Sons, Ltd.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available