The CEO as Chief Political Officer: Managerial Discretion and Corporate Political Activity

SMC Author

Michael Hadani

SMC Affiliated Work

1

Status

Faculty

School

School of Economics and Business Administration

Department

Management and Entrepreneurship

Document Type

Article

Publication Date

11-2015

Publication / Conference / Sponsorship

Journal of Business and Research

Description/Abstract

Corporate political activity (CPA) is an important nonmarket strategy aimed at advancing a firm's interests by influencing public policy. Yet studies report mixed results as to the impact of CPA on firm outcomes. Building on recent extant research we suggest that one reason for the ambivalent evidence regarding the impact of CPA on firm performance is the moderating role of CEO discretion on the CPA-firm performance relationship. In a longitudinal study of S&P 1000 firms over 10 years, we test competing perspectives regarding the moderating impact of CEO discretion on the CPA-corporate performance relationship. We find that some aspects of CEO discretion, in particular CEO duality, moderate the relationship between CPA and performance. The findings provide some support for an agency view of the impact of CEO discretion the CPA-performance relationships, which carry implications for both scholarship and regulation in the areas of CPA and corporate governance.

Keywords

Corporate political activity, CEO discretion, Firm performance, Agency theory, Stewardship, Corporate governance

Scholarly

yes

Peer Reviewed

1

DOI

10.1016/j.jbusres.2015.03.046

Volume

68

Issue

11

First Page

2330

Last Page

2337

Disciplines

Business | Economics

Original Citation

Hadani, M. Dahan, N. & Doh, J. (2015). The CEO as chief political officer: Managerial discretion and corporate political activity. Journal of Business Research, 68 (11), 2330–2337. doi:10.1016/j.jbusres.2015.03.046

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