Research

Hedge funds connected to lobbyists outperformed passive benchmarks by 56 to 93 basis points a month on politically sensitive holdings from 1999 to 2012. The advantage faded after the 2012 STOCK Act.

Around Jack Abramoff's 2006 guilty plea, which constrained lobbying, firms that lobbied more lost more market value, indicating that investors price lobbying as value-creating.

Lobbying is positively related to accounting measures of performance and to market measures of financial performance.

Controlling for PAC contributions, shareholders value lobbying undertaken on their behalf, particularly at firms without a contributing PAC.

Firms whose insiders lobbied against strict SOX disclosure rules earned roughly 7% higher cumulative returns in the months before passage, using lobbying to identify the firms most affected by a law.

The benefits of lobbying are concentrated among firms whose political alignment matches the party in power.

The relationship between lobbying and firm value, including post-lobbying abnormal returns, varies with the political orientation of the firm's managers.

Across 538 energy policies, lobbying moves the probability of enactment only slightly, but estimated average returns to the lobbying firms exceed 130%.

Universities represented on appropriations committees earn substantial returns on lobbying for earmarks; those without representation earn little.

Lobbying a broader set of government targets improves contract awards and performance up to a point of diminishing returns, with political connectedness moderating the effect.

Financially weaker firms, measured by CDS spreads, lobbied more around the 2009 Stimulus Act, and lobbying was associated with a higher likelihood of receiving stimulus funds.

Banks' lobbying and political connections were associated with receiving capital under TARP's Capital Purchase Program, especially among weaker banks.

Banks that lobbied and had political connections were more likely to receive TARP support.

Firms that discuss a political topic more on earnings calls cut hiring and investment and increase lobbying on that topic in the following quarter.

Lenders that lobbied more on mortgage and securitization issues took more risk before 2008, had higher delinquencies in the crisis and were more likely to be bailed out.

Financial-industry lobbying, and connections between lobbyists and legislators, are associated with legislators shifting toward deregulation from 1999 to 2006.

Banks that lobby are less likely to face severe enforcement actions from their regulators, consistent with regulatory capture.

Firms that lobby are detected for fraud later and are less likely to be caught by regulators; fraudulent firms spend more on lobbying, particularly during the fraud period.

Firms with long-term political connections through contributions and lobbying are less likely to face SEC enforcement and receive lower penalties; lobbying the SEC directly is most effective.

Lobbyists who previously worked for a U.S. senator lose about 24% of their revenue when that senator leaves office, evidence that connections are a large part of what lobbyists sell.

Lobbyists tend to follow the legislators they are connected to across committee assignments, indicating that access matters alongside issue expertise.

Corporate foundations' giving to charities in a district rises when its representative joins committees relevant to the firm; the authors estimate about 6.3% of corporate giving is politically motivated.

Few firms lobby, lobbying rises with firm size and is highly persistent from year to year, consistent with significant up-front costs of entering the political process.

Using firm-level LDA reports, much of the variation in trade lobbying and tariffs occurs within industries, driven by product differentiation between firms.

Abnormal stock returns rise with lobbying spending, with the largest gains from lobbying on tax, defense, trade and budget issues.

Firms lobby more during recessions, newcomers are more likely to start, and lobbying firms are more likely to receive federal subsidies.

Votes by legislators with concentrated interests in an industry predict its future returns; a long-short portfolio earns over 90 basis points a month after passage.

The number of candidates a firm supports through PAC contributions positively predicts future abnormal returns, after controlling for size, book-to-market and momentum.

Politically connected brokerages issue more, and more profitable, recommendations around policy events, consistent with obtaining value-relevant information through connections.

Across 81,000 bills, each additional $1m spent lobbying on a bill is associated with a 29% higher chance that it passes, after allowing for the Congress in session and which party controls it.

Method. Estimated across all bills from the 107th to 117th Congress; the figure is an average association.

During the pandemic stimulus, firms won an estimated $3.26 in government funding and contracts for every dollar spent on lobbying. Those that lobbied before the money was allocated did markedly better.

Method. Heckman selection model with firm and contract fixed effects, Q2 2020 to Q4 2021.