The Corporate Value of (Corrupt) Lobbying

The Corporate Value of (Corrupt) Lobbying

Alexander Borisov, Eitan Goldman, Nandini Gupta

Series number :

Serial Number: 

Date posted :

May 01 2014

Last revised :

June 12 2014
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  • Lobbying • 
  • shareholder value • 
  • Corporate Social Responsibility • 
  • corruption • 
  • political connections

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.


Real name:
Alexander Borisov
Real name:
Nandini Gupta