Consumption or Investment? On Motivations for Political Giving

Abstract

We propose a strategy to distinguish investment and consumption motives for political contributions by examining the behavior of individual corporate executives. If executives expect contributions to yield policies beneficial to company interests, those whose compensation varies directly with corporate earnings should contribute more than those whose compensation comes largely from salary alone. We find a robust relationship between giving and the sensitivity of pay to company performance and show that the intensity of this relationship varies across groups of executives in ways that are consistent with instrumental giving but not with alternative, taste-based, accounts. Together with earlier findings, our results suggest that contributions are often best understood as purchases of "good will" whose returns, while positive in expectation, are contingent and rare.

Top management teams and corporate political activity: Do top management teams have influence on corporate political activity?

“…Previous studies show that executive compensation influences executives' support for political action (Gordon et al, 2007;Kim, 2008). The underlying idea is that highly paid senior executives are more likely to support political activity because they expect political activity to benefit their firms so that they can obtain substantial increases in their compensation packages.…”

“…In other words, the dependent variable is censored at zero. I conduct a Tobit regression analysis to accommodate the censored data (Gordon et al, 2007;Hadani, 2007). The variance inflation factor estimates for all variables indicate that multicollinearity is not a concern (mean = 4.14).…”

“…Disagreements on whether or not to engage in a political activity and if so which activity to implement are likely to occur; agreement among TMT members may not form easily (Clawson et al, 1998). For instance, Gordon et al (2007) show that corporate executives differ in terms of their willingness to contribute to campaign contributions, indicating the divergent motivations of executives in political activities. Presumably corporate political activity requires not only a shared perception, but also a shared commitment among corporate executives.…”

Politicizing Agency Spending Authority: Lessons from a Bush-era Scandal

“…In his discussion of "contingent centralization," for example, Rudalevige (2002) describes historical cases in which the president found it advantageous to grant discretion to agency personnel to formulate policy initiatives rather than rely on centralized policy making in the Executive Office of the President. In these inthe opprobrium of a broader audience were it publicized (Gordon, Hafer, and Landa 2007;Morton and Cameron 1992), so they would be wise to obscure it. stances, the informational advantages of those agents made decentralization an attractive choice.…”

The Spoils of Victory: Campaign Donations and Government Contracts in Brazil

“…Specific roll call votes and other legislative actions by politicians, while clearly under their direct control, are often difficult to link back to the interests of individual donor firms (Gordon, Hafer, and Landa 2007). In an analysis of Brazil, Claessens, Feijen, and Laeven (2008) look instead at the effect of campaign contributions on firms' stock market valuations and overall access to bank financing.…”