Corporate political strategies
Article first published online: 15 NOV 2010
© 2010 The Authors. Accounting and Finance © 2010 AFAANZ
Accounting & Finance
Volume 51, Issue 1, pages 252–277, March 2011
How to Cite
Mathur, I. and Singh, M. (2011), Corporate political strategies. Accounting & Finance, 51: 252–277. doi: 10.1111/j.1467-629X.2010.00386.x
- Issue published online: 1 MAR 2011
- Article first published online: 15 NOV 2010
- Received 17 March 2009; accepted 1 October 2010 by Robert Faff (Editor).
- Corporate political strategies;
- Shareholder rights;
- Agency conflict;
The paper offers a comprehensive and integrative review of the current literature on corporate political strategies sharing common boundaries with finance, accounting and corporate governance. While there appears to be a heightened interest among researchers in studying the value relevance of corporate political strategies [Chen et al. (2010), Goldman et al. (2009), Cooper et al. (2010), Richter et al. (2008), Hochberg et al. (2007), de Figueiredo and Edwards (2007), Faccio and Parsley (2009), and Myers (2009) among others], interestingly, finance and corporate governance scholars have yet to embrace the research on political strategies as part of their mainstream research. Taking a micro perspective at the firm level, we review the major scholarly works in the economics, finance and management disciplines with respect to the firm attributes shaping the corporate decision to engage politically, modes of corporate political participation, and the value impact of corporate political activity. The overarching theme of the review article is to integrate diverse – political economy and management – paradigms of corporate political participation and rationalize the value relevance within the corporate finance and corporate governance perspective. The paper also presents focused preliminary evidence on the determinants and value impact of corporate lobbying strategies. For the sample of 5452 firm-year observations, the results indicate that while for large firms corporate lobbying may not be agency driven and may create value, for small firms, despite low shareholder rights associating with higher lobbying engagements, lobbying still relates positively to value added.