Corporate political activity and firm ownership structure -

Abstract

Corporate political activity refers to corporate tactics that attempt to influence and impact government policymaking in a way that reaps favorable consequences to the firm. This paper investigates the relationship between CPA and the family ownership structure. We examine whether the likelihood of CPA in family firms is significantly different from that in non-family firms. We rely on prior research that has investigated CPA mainly in international context and various theories associated with family firms in our attempt to explore variables that impact political activity on a firm level. Our sample consists of 10,678 observations from 2009 through 2012 for firms listed on the North American stock exchange. We conduct a probit analysis for panel data from 2009-2012 using STATA by including the corporate political activity as a dependent variable, the family ownership as an independent variable, as well as other control variables found previously significant in the literature. We document that family firms are more likely to engage in corporate political activity when compared to non-family firms. Furthermore, our model reveals that size and age of the firm to be strong predictors for engagement in political corporate activity.