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What drives firms' decisions to lobby and determinants of their lobbying positions: Evidence from firms' comment letter submissions during FASB's stock option expensing proposal in 2004

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  • Koh, Wei Chern

Abstract

I examine what drives firms' decisions on whether or not to lobby and, if so, whether to oppose or support FASB's 2004 option expensing proposal. Given that the accounting treatment in place and the political climate were different in 2004 than in 1993, it becomes interesting to examine whether the incentives driving managerial lobbying process have changed. Indeed, in contrast to prior research that finds top managers' option compensation being the main incentive to oppose option expensing in 1993, firms' closeness to debt constraints is the main incentive to oppose option expensing in 2004. I also find that firms that are smaller, that are in an industry with peers who have lobbied, that have board interlocks with firms that have lobbied, and that have higher board independence are more likely to self-select to lobby. While prior accounting lobbying research has examined firms' decisions to lobby and firms' decision on their lobbying positions independently, this study improves on prior research methodology by using a two-level nested logit model and examines both decisions.

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  • Koh, Wei Chern, 2011. "What drives firms' decisions to lobby and determinants of their lobbying positions: Evidence from firms' comment letter submissions during FASB's stock option expensing proposal in 2004," The International Journal of Accounting, Elsevier, vol. 46(1), pages 1-24, March.
  • Handle: RePEc:eee:accoun:v:46:y:2011:i:1:p:1-24
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    3. repec:eee:advacc:v:39:y:2017:i:c:p:1-20 is not listed on IDEAS
    4. Guerreiro, Marta Silva & Rodrigues, Lúcia Lima & Craig, Russell, 2012. "Voluntary adoption of International Financial Reporting Standards by large unlisted companies in Portugal – Institutional logics and strategic responses," Accounting, Organizations and Society, Elsevier, vol. 37(7), pages 482-499.
    5. Kanol Direnç, 2015. "Social influence, competition and the act of lobbying," Business and Politics, De Gruyter, vol. 17(1), pages 75-96, April.
    6. Jeffrey S. Harrison & Joyce van der Laan Smith, 2015. "Responsible Accounting for Stakeholders," Journal of Management Studies, Wiley Blackwell, vol. 52(7), pages 935-960, November.

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