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Using an event study, we examine whether the stock market considers corporate lobbying to be a value-enhancing investment. On January 3, 2006, lobbyist Jack Abramoff pleaded guilty to bribing politicians, which generated intense scrutiny of lobbyists, limiting their political influence.
Using this event as a negative exogenous shock to the ability of firms to lobby, we show that a firm that spends $100,000 more on lobbying in the three years prior to 2006, experiences a loss of about $1.3 million in value around the guilty plea. We also find suggestive evidence that part of the value from lobbying arises from potentially unethical practices.
A judicial determination of fair value in a private company can be a difficult and imprecise process. This difficulty coupled with variations in way...
We investigate the impact on firms of joining the S&P 500 index from 1997 to 2017. We find that the positive announcement effect on the stock price of...