Does Economic Policy Uncertainty Drive the Initiation of Corporate Lobbying?

61 Pages Posted: 31 Jul 2018 Last revised: 6 Apr 2020

See all articles by Longfei Shang

Longfei Shang

Hong Kong Polytechnic University

Ji-Chai Lin

Hong Kong PolyU

Walid Saffar

Hong Kong Polytechnic University - School of Accounting and Finance

Date Written: April 3, 2020

Abstract

Economic policy uncertainty (EPU) raises firms’ incentive to lobby policymakers to access policy information and influence policy outcomes. Surprisingly, we find that non-lobbying firms are less likely to initiate lobbying during heightened EPU periods. The evidence is consistent with our time-varying barriers hypothesis that lobbying entry barriers increase with EPU. We verify that the negative effect of EPU on lobbying initiation arises through the channels of lobbying entry expenses and returns to experience. Furthermore, lobbying entry expenses are not large, implying that returns to experience is likely a more serious barrier that prevents non-lobbying firms from initiating lobbying, especially during heightened EPU periods.

Keywords: Economic Policy Uncertainty; Lobbying Decision; Lobbying Entry Barriers

JEL Classification: D72; G18; G31; G38; P16

Suggested Citation

Shang, Longfei and Lin, Ji-Chai and Saffar, Walid, Does Economic Policy Uncertainty Drive the Initiation of Corporate Lobbying? (April 3, 2020). Available at SSRN: https://ssrn.com/abstract=3211764 or http://dx.doi.org/10.2139/ssrn.3211764

Longfei Shang

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

Ji-Chai Lin

Hong Kong PolyU ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon
China

Walid Saffar (Contact Author)

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Li Ka Shing Tower
Hong Hum
Kowloon
Hong Kong

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