Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-22T16:45:55.538Z Has data issue: false hasContentIssue false
  • English
  • Français

Targeting Corporate Political Strategy: Theory and Evidence from the U.S. Accounting Industry

Published online by Cambridge University Press:  20 January 2017

Richard G. Vanden Bergh  and
Guy L.F. Holburn
Richard G. Vanden Bergh
Affiliation:
University of Vermont
Guy L.F. Holburn
Affiliation:
University of Western Ontario
Get access Rights & Permissions [Opens in a new window]

Abstract

By analyzing the interaction between a business firm and multiple government institutions (including a regulatory agency, an executive and a bicameral legislature), we develop predictions about how firms target their political strategies at different branches of government when seeking more favorable public policies. The core of our argument is that firms will target their resources at the institution that is ‘pivotal’ in the policy-making process. We develop a simple framework, drawing on the political science literature, which identifies pivotal institutions in different types of political environments. We find empirical support for our thesis in an analysis of how U.S. accounting firms shifted their political campaign contributions between the House and Senate in response to the threat of new regulations governing auditor independence during the 1990s.

Keywords

corporate political strategypivotal politicscampaign contributions
Type
Article
Information
Business and Politics , Volume 9 , Issue 2 , August 2007 , pp. 1 - 31
Copyright
Copyright © V.K. Aggarwal 2007 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adler, E. S. Congressional District Data File, [102nd Congress and 103rd Congress]. University of Colorado, Boulder, CO.Google Scholar
Ansolabehere, S., de Figueiredo, J.M., and Snyder, J.M. 2003. Why is there so little money in U.S. politics? Journal of Economic Perspectives, 17: 105–30.Google Scholar
Austen-Smith, D., & Wright, J. R. 1994. Counteractive lobbying. American Journal of Political Science, 38: 25–44.Google Scholar
Bailey, M., & Chan, K. 2001. Comparing Presidents, Senators, and Justices: Interinstitutional Preference Estimation. Journal of Law, Economics and Organization, 17: 477–506.Google Scholar
Baron, D. 1995a. Integrated strategy: Market and nonmarket components. CaliforniaManagement Review, 37: 47–65.Google Scholar
Baumgartner, F. R., & Leech, B. L. 2001. Interest niches and policy bandwagons: patterns of interest group involvement in national politics. Journal of Politics, 63: 1191–123.Google Scholar
Bonardi, J. P., Hillman, A., & Keim, G. 2004. The attractiveness of political markets – implications for firm strategy. Academy of Management Review.Google Scholar
Buchholz, R. A., Evans, W.D. & Wagley, R.A. 1994. Management Responses to Public Issues (Third Edition). Prentice Hall, Inc. New Jersey.Google Scholar
Chappell, H.W. Jr. 1982. Campaign contributions and congressional voting: A simultaneous probit-tobit model. Review of Economics and Statistics, 64 (1): 77–83.Google Scholar
De Figueiredo, J. & de Figueiredo, R. 2002. The Allocation of Resources by Interest Groups: Lobbying, Litigation and Administrative Regulation. Business and Politics, 4 (2): article 4.CrossRefGoogle Scholar
Dolton, P.J. & Makepeace, G.H. 1987. Interpreting Sample Selection Effects. Economic Letters, 24: 373–379.Google Scholar
Ferejohn, S. & Shipan, C. 1990. Congressional influence on bureaucracy. Journal of Law, Economics & Organization, 6: 1–20.Google Scholar
Gerde, V.W., & White, C.G. 2003. Auditor independence, accounting firms, and the securities and exchange commission. Business and Society, 42 (1): 83–114.CrossRefGoogle Scholar
Getz, K.A. 1997. Research in corporate political action. Business & Society, 36: 32–72.Google Scholar
Greene, W.H. 2003. Econometric Analysis. (5th ed.). New Jersey: Prentice Hall.Google Scholar
Grossman, G., & Helpman, E. 2001. Special Interest Politics. MIT Press: Cambridge, MA Google Scholar
Grier, K.B., Munger, M. C., & Roberts, B.E. 1994. The determinants of industry political activity, 1978-1986. American Political Science Review, 88: 911–926.Google Scholar
Heckman, J.J. 1979. Sample selection bias as a specification error. Econometrica 47: 153–161.CrossRefGoogle Scholar
Hillman, A. J., & Hitt, M. A. 1999. Corporate political strategy formulation: A model of approach, participation and strategy decisions. Academy of Management Review, 24: 825–842.Google Scholar
Hillman, A., & Keim, G. 1995. International variation in the business-government interface: Institutional and organizational considerations. Academy of Management Review, 20: 193–214.Google Scholar
Hillman, A., Zardkoohi, A., & Bierman, L. 1999. Corporate political strategies and firm performance: Indications of firm-specific benefits from personal service in the U.S. government. Strategic Management Journal, 20: 67–81.3.0.CO;2-T>CrossRefGoogle Scholar
Holburn, G.L.F., & Vanden Bergh, R.G. 2004. Influencing agencies through pivotal political institutions. Journal of Law, Economics & Organization, 20: 458–483.CrossRefGoogle Scholar
Keim, G.D., & Zeithaml, C. P. 1986. Corporate political strategy and legislative decision making: A review and contingency approach. Academy of Management Review, 11: 828–843.CrossRefGoogle Scholar
Krehbiel, K. 1999. Pivotal politics: A refinement of nonmarket analysis for voting institutions. Business and Politics, 1: 63–81.Google Scholar
Leung, S.F. and Yu, S. 1996. On the Choice between Sample-Selection and Two-Part Models. Journal of Econometrics 72: 197–229 CrossRefGoogle Scholar
Levitt, A. 2002. Take on the Street. Pantheon Books: New York.Google Scholar
Lublin, D. 1997. Congressional District Demographic and Political Data. American University, Washington, D.C. Google Scholar
Mahon, J. F., & Murray, E. A. 1981. Strategic planning for regulated companies. Strategic Management Journal, 2: 251–262.Google Scholar
Manning, W., Duan, N., & Rogers, W. 1987. Monte Carlo evidence on the choice between sample selection and two-part models. Journal of Econometrics 35: 59–82.CrossRefGoogle Scholar
Marsh, S. J. 1998. Creating barriers for foreign competitors: A study of the impact of anti- dumping actions on the performance of U.S firms. Strategic Management Journal, 19: 25–38.Google Scholar
Mayhew, D. 1974. Congress: The Electoral Connection. New London: Yale University.Google Scholar
McCarty, N., & Rothenberg, L. 1996. Commitment and the campaign contribution contract. American Journal of Political Science, 40 (3): 872–904.CrossRefGoogle Scholar
Murtha, T., & Lenway, S. 1994. Country capabilities and the strategic state: How national political institutions affect multinational corporations’ strategies. Strategic Management Journal, 15: 113–129.Google Scholar
Neter, J., Wasserman, W. & Kutner, M. 1990. Applied linear statistical models: regression, analysis of variance, and experimental designs, Irwin. Homewood, IL Google Scholar
Peltzman, S. 1984. Constituent Interest and Congressional Voting. Journal of Law & Economics, 27: 181–220.Google Scholar
Poole, K.T., 1998. Recovering A Basic Space From a Set of Issue Scales. American Journal of Political Science, 42 (3): 954–993 Google Scholar
Poole, K.T., & Rosenthal, H. 1991. Patterns of congressional voting. American Journal of Political Science, 35 (1), February.Google Scholar
Ring, P., Lenway, S., & Govekar, M. 1990. Management of the political imperative in international business. Strategic Management Journal, 11: 141–151.Google Scholar
Roberts, R.W., Dwyer, P.D. & Sweeney, J.T. 2003. Political strategies used by the US public accounting profession during auditor liability reform: the case of the Private Securities Litigation Reform Act of 1995. Journal of Accounting and Public Policy, 22: 433–457.CrossRefGoogle Scholar
Ryan, M. H., Swenson, C.L., & Bucholz, R.A. 1987 Corporate Strategy, Public Policy, and the Fortune 500: How America's Major Corporations Influence Government. New York, NY: Blackwell.Google Scholar
Schuler, D.A., Rehbein, K., & Cramer, R.D. 2002. Pursuing strategic advantage through political means: A multivariate approach. Academy of Management Journal, 45: 659–672.Google Scholar
Shaffer, B. & Hillman, A. 2000. The development of business-government strategies in diversified firms. Strategic Management Journal, 21: 175–190.3.0.CO;2-L>CrossRefGoogle Scholar
Shepsle, K.A., Weingast, B.R. 1987. The institutional foundations of committee power. American Political Science Review, 81: 85–104.Google Scholar
Snyder, J. 1990. Campaign contributions as investments: The U.S. House of Representatives, 1980-1986. Journal of Political Economy, 98: 1195–1227.Google Scholar
Snyder, J. 1991. On buying legislatures. Economics and Politics, 93–109.Google Scholar
Stratmann, T. 1992. Are contributors rational? Untangling strategies of political action committees. Journal of Political Economy, 100: 647–664.Google Scholar
Stratmann, T. 1998. The market for congressional votes: Is timing of contributions everything? Journal of Law & Economics, 41: 85–113.Google Scholar
Tripathi, M., Ansolabehere, S. & Snyder, J. M. 2002. Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act. Business and Politics (online version) 4: article 2.Google Scholar
Vanden Bergh, R. G., & de Figueiredo, R. 2003. Political Uncertainty and Administrative Procedures in ed. Burden, Barry Uncertainty in American Politics. Cambridge: Cambridge University Press.Google Scholar
Weingast, B.R., & Moran, M.J. 1983. Bureaucratic discretion or congressional control? Regulatory policymaking by the federal trade commission. Journal of Political Economy, 91 (5): 765–800.CrossRefGoogle Scholar
Wilson, J. 1980. The Politics of Regulation. New York: Basic Books.Google Scholar