In search of El Dorado: The elusive financial returns on corporate political investments

• 成果类型: Article
• 署名作者: Hadani, Michael; Schuler, Douglas A.
• 署名单位: Long Island University; Long Island University Post; Rice University
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.2006
• 发表日期: 2013
• 页码: 165-181
• 关键词: corporate political activity; regulation; Agency theory; political service; financial performance

摘要

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.