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The Role of Institutional Investors in Corporate Lobbying

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  • Anqi Jiao

Abstract

This study investigates whether and how institutional investors affect corporate lobbying of firms in their portfolios. I find that firmsâ lobbying activities are positively associated with ownership by institutional investors who also lobby. The effect is stronger for the firms that face more constraints to lobbying. I use the Russell index reconstitution to establish causality. I further document three plausible channels. First, institutional investors support firmsâ lobbying by pushing for the same congressional bills. Second, institutional investors share political resources such as lobbyists with firms. Third, institutional investors protect firmsâ private information by voting against proposals on additional lobbying disclosure. Overall, the study shows that institutional investors can alleviate the constraints and costs in corporate lobbying.

Suggested Citation

  • Anqi Jiao, 2019. "The Role of Institutional Investors in Corporate Lobbying," 2019 Papers pji208, Job Market Papers.
    • Handle: RePEc:jmp:jm2019:pji208
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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