GUY L. F. HOLBURN and RICHARD G. VANDEN BERGH contributed equally to this paper.
Research Notes and Commentaries
Integrated market and nonmarket strategies: Political campaign contributions around merger and acquisition events in the energy sector
Article first published online: 15 MAY 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Strategic Management Journal
How to Cite
Holburn, G. L. F. and Vanden Bergh, R. G. (2013), Integrated market and nonmarket strategies: Political campaign contributions around merger and acquisition events in the energy sector. Strat. Mgmt. J.. doi: 10.1002/smj.2096
- Article first published online: 15 MAY 2013
- Accepted manuscript online: 1 FEB 2013 03:54AM EST
- Manuscript Accepted: 5 JAN 2013
- Manuscript Revised: 18 OCT 2012
- Manuscript Received: 6 MAR 2012
- The Suncor Energy Foundation
- The Social Sciences and Humanities Research Council of Canada
- University of Vermont
- nonmarket strategy;
- political campaign contributions;
- mergers and acquisitions;
- electric utilities
We examine how firms use political strategies to protect economic rents created by mergers and acquisitions against dissipation by regulators. In regulated industries, regulators can impose costly merger conditions, for instance consumer rate reductions in the utilities sector, thereby reducing shareholder gains. We investigate empirically whether and how firms use election campaign contributions to politicians as a method of influencing regulatory merger approvals. In a statistical analysis of campaign contributions by all electric utilities from 1998 to 2006, we find that utilities increased their contributions in the year before they announced a merger and that merging utilities increased their contributions more in states with greater political party competition. Our findings contribute to political strategy research by providing novel evidence that firms integrate market and nonmarket strategies. Copyright © 2013 John Wiley & Sons, Ltd.