Institutional ownership monitoring and corporate political activity: Governance implications

SMC Author

Hadani, Michael

SMC Affiliated Work

1

Status

Faculty

School

School of Economics and Business Administration

Department

Management and Entrepreneurship

Document Type

Article

Publication Date

1-1-2012

Publication / Conference / Sponsorship

Journal of Business Research

Description/Abstract

Corporate political activity (CPA) represents a strategy whereby firms attempt to influence government policymaking, to advance their strategic goals; firm owners may benefit from it. However, other research indicates that CPA is uncertain and increases information asymmetries between owners and managers. Hence, this study avoids the assumption that owners and managers have similar views regarding CPA and focuses on the relationship between institutional investors, large investors' ownership and investors' portfolio characteristics on firm CPA. The results reveal that institutional ownership is associated with reduced CPA among S&P 500 firms across five election cycles, but that investors' portfolio concentration is associated with increased CPA. The implications of these findings are discussed.

Keywords

Institutional ownership, Corporate political activity, Agency theory, Lobbying

Scholarly

yes

Peer Reviewed

1

DOI

10.1016/j.jbusres.2011.05.003

Volume

65

First Page

944

Last Page

950

Disciplines

Business | Economics

Original Citation

Hadani, Michael. (2012). Institutional ownership monitoring and corporate political activity: Governance implications. Journal of Business Research, 65, 944-950.

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