Campaign contributions are typically seen as a strategic investment for firms; recent empirical evidence, however, has shown few connections between firms’ contributions…
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.
The purpose of this paper is to investigate the relationships between regulatory changes, returns on equity and stock market valuations for Canadian food and non‐food…
The purpose of this paper is to investigate the relationships between regulatory changes, returns on equity and stock market valuations for Canadian food and non‐food agribusinesses.
Two empirical approaches are employed. First, an event study is used to evaluate the impact of official regulatory announcements on the stock market valuations of selected Canadian agribusinesses. Next, an approach introduced by Mishra et al. using the Du Pont expansion is applied to investigate the effect of regulations on firms' accounting profits. Data on Canadian food and non‐food agribusinesses are collected from Bloomberg, Thompson One Banker and SEDAR.
The event study demonstrates that official regulatory announcement dates do not correspond with abnormal stock market returns for Canadian firms, while the Du Pont model yields mixed evidence with respect to their accounting profits.
This paper only considers publicly traded companies. As a result, survivorship bias may exist. Future research should include privately held and cooperative firms.
Food regulations can influence firm profits and shareholder wealth, so understanding how government actions influence agribusiness is important when considering the total costs of current and future food policy.
The interaction between policy and the financial performance of Canada's publicly traded agribusinesses is an under‐researched area and no studies have examined Canadian data. The results of this study are valuable to both policy makers and researchers.