Unmasking Firms’ Political Ideological Associations

Sustainable Leadership in Frontier Asia Region: Managerial Discretion and Environmental Innovation

“…Self-serving behaviors and non-productive optimizing strategies may be used to abuse managerial discretion [74,75]. Higher managerial discretion has the ability to constrain environmental progress by diverting attention away from personal benefits such as prestige, reputation, and compensation package, as well as personal social capital and post-retirement career [76,77].…”

The CEO as chief political officer: Managerial discretion and corporate political activity

“…CEO influence can result in corporate overinvestment in CPA, leading to deteriorating corporate performance, sometimes for the personal benefit of the CEO. These benefits can include increased compensation (without performance pressures), developing the CEO's prestige and reputation (Reich, 2010), personal social capital (Faccio, 2006;Hart, 2004), preparing a post-corporate career in politics (Coates, 2012), and possibly pursuing an ideologically partisan agenda (Nalick, Kuban, Schijven, & Xu, 2014). Unfortunately such a tendency can actually harm firm performance.…”

Corporate political activism, information transparency and IPO compliance costs

“…In this respect, we advance two views of CPA, the agency view and the visibility view. 3 According to the agency view of corporate political activism, politically connected firms may have a less transparent information environment than their peers, because their connections distract managers from pursuing shareholders' interests by causing them to forgo value enhancing projects (Correia, 2014) or because managers of connected firms use political outlays sub-optimally (e.g., Arlen and Weiss, 1995;Nalick et al, 2014). To conceal inefficiencies from the resulting agency problems, managers of politically connected firms have incentives to deliberately misreport and obfuscate financial disclosures (Leuz and Oberholzer-Gee, 2006;Ramanna and Roychowdhury, 2010;Nalick et al, 2014;Piotroski et al, 2015).…”

“…3 According to the agency view of corporate political activism, politically connected firms may have a less transparent information environment than their peers, because their connections distract managers from pursuing shareholders' interests by causing them to forgo value enhancing projects (Correia, 2014) or because managers of connected firms use political outlays sub-optimally (e.g., Arlen and Weiss, 1995;Nalick et al, 2014). To conceal inefficiencies from the resulting agency problems, managers of politically connected firms have incentives to deliberately misreport and obfuscate financial disclosures (Leuz and Oberholzer-Gee, 2006;Ramanna and Roychowdhury, 2010;Nalick et al, 2014;Piotroski et al, 2015). Alternatively, politically connected firms may unintentionally have poor financial reporting quality, simply because they have weak incentives to portray accurately their financial reports, as they enjoy more favorable regulatory treatment than their non-connected counterparts (Yu and Yu, 2011;Correia, 2014).…”