Back to Search
Start Over
Political Activism and Firm Innovation
- Source :
- Journal of Financial and Quantitative Analysis. 55:989-1024
- Publication Year :
- 2019
- Publisher :
- Cambridge University Press (CUP), 2019.
-
Abstract
- Political activism positively affects firm innovation. Firms that support more politicians, politicians on Congressional committees with jurisdictional authority over the firms’ industries and politicians who join those committees innovate more. We employ instrumental variables estimation and a natural experiment to show a causal effect of political activism on innovation. The results are consistent with the hypothesis that political activism is valuable because it helps reduce political uncertainty, which, in turn, fosters firm innovation. Also consistent with this hypothesis, we show that politically active firms successfully time future legislation and set their innovation strategies in expectation of future legislative changes.Keywords: political contributions, innovation, investment policy, policy uncertainty
- Subjects :
- Economics and Econometrics
JEL: D - Microeconomics/D.D7 - Analysis of Collective Decision-Making/D.D7.D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Natural experiment
Legislation
JEL: G - Financial Economics/G.G3 - Corporate Finance and Governance/G.G3.G31 - Capital Budgeting • Fixed Investment and Inventory Studies • Capacity
JEL: G - Financial Economics/G.G3 - Corporate Finance and Governance/G.G3.G38 - Government Policy and Regulation
Politics
JEL: O - Economic Development, Innovation, Technological Change, and Growth/O.O3 - Innovation • Research and Development • Technological Change • Intellectual Property Rights/O.O3.O38 - Government Policy
Accounting
Political science
0502 economics and business
050207 economics
Estimation
JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D80 - General
050208 finance
Instrumental variable
05 social sciences
Causal effect
Legislature
Investment policy
Political economy
Political activism
[SHS.GESTION]Humanities and Social Sciences/Business administration
Economic system
JEL: O - Economic Development, Innovation, Technological Change, and Growth/O.O3 - Innovation • Research and Development • Technological Change • Intellectual Property Rights/O.O3.O31 - Innovation and Invention: Processes and Incentives
Finance
Subjects
Details
- ISSN :
- 17566916 and 00221090
- Volume :
- 55
- Database :
- OpenAIRE
- Journal :
- Journal of Financial and Quantitative Analysis
- Accession number :
- edsair.doi.dedup.....c9c6bcd2509db9af9e95e28a2ff6dcde