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Motivations for Corporate Political Activity

Strategy Beyond Markets

ISBN: 978-1-78635-020-6, eISBN: 978-1-78635-019-0

ISSN: 0742-3322

Publication date: 3 May 2016

Abstract

Campaign contributions are typically seen as a strategic investment for firms; recent empirical evidence, however, has shown few connections between firms’ contributions and regulatory or performance improvements, prompting researchers to explore agency-based explanations for corporate politics. By studying intrafirm campaign contributions of CEOs and political action committees (PACs), we investigate two hypotheses related to public politics and demonstrate that strategic and agency-based motivations may hold simultaneously. Exploiting transaction-level data, with over 6.8 million observations, we show that (i) when PACs give to specific candidates, executives give to the same candidates, especially those who are strategically important to the firm; and (ii) when executives give to candidates who are not strategically important, PACs give to the same candidates potentially due to agency problems within the firm.

Keywords

Citation

Fremeth, A., Richter, B.K. and Schaufele, B. (2016), "Motivations for Corporate Political Activity", Strategy Beyond Markets (Advances in Strategic Management, Vol. 34), Emerald Group Publishing Limited, Bingley, pp. 161-191. https://doi.org/10.1108/S0742-332220160000034006

Publisher

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Emerald Group Publishing Limited

Copyright © 2016 Emerald Group Publishing Limited