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Corporate lobbying and US federal grants: Information in exchange for compensation

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  • Londoño van Rutten, Rodrigo

Abstract

This paper examines the effect of firms’ lobbying activities on US federal grants. My model indicates that firms lobbying the granting agency during the grant allocation process have 7.04 times higher odds of getting a federal award. The main results are robust across lobbying measures and account for endogeneity concerns by employing instrumental variables and propensity score matching strategies. I also observe that federal grants are more responsive to lobbying expenditures to the granting agency when a firm’s information is more opaque. In addition, I find that firms receiving more federal grants tend to have lower costs of debt and higher CEO compensation without being able to show higher firm performance. Overall, these results appear consistent with the informational lobbying theory at the regulator level and self-serving behavior at the management level.

Suggested Citation

  • Londoño van Rutten, Rodrigo, 2025. "Corporate lobbying and US federal grants: Information in exchange for compensation," Journal of Financial Stability, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:finsta:v:81:y:2025:i:c:s1572308925001020
    DOI: 10.1016/j.jfs.2025.101473
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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H8 - Public Economics - - Miscellaneous Issues
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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