The Corporate Value of (Corrupt) Lobbying

Award Winner: 
Winner of the 2015 Standard Life Investments Finance Prize (Best paper in the Finance Working Paper series)

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