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Buffing firm innovation by lobbying

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  • Jiao, Anqi
  • Lu, Juntai

Abstract

Corporate lobbying positively influences firm innovation outcomes. Firms that engage more in lobbying have more patents, more patent citations, and greater patent value. We establish this causality using instrumental variables estimation. Corporate lobbying plays a role of persuasion and fosters firm innovation by transmitting valuable information to politicians, which enhances firms' external political environment. The impact of lobbying on innovation is more pronounced for firms with comparative advantages in the product market, financial health, ESG performance, and institutional support. These results contribute to a deeper understanding of the role of firms' information value in the political process and provide new insights into how lobbying buffs firm development.

Suggested Citation

  • Jiao, Anqi & Lu, Juntai, 2024. "Buffing firm innovation by lobbying," Journal of Corporate Finance, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:corfin:v:85:y:2024:i:c:s0929119924000191
    DOI: 10.1016/j.jcorpfin.2024.102557
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    More about this item

    Keywords

    Corporate lobbying; Firm innovation; Information transmission; Information value;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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