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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
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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 

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