Ali, Hesham
(2022)
Empirical essays on corporate political responsibility.
PhD thesis, University of Nottingham.
Abstract
Corporate social responsibility (CSR) is hardly a new concept, but corporate political responsibility (CPR) is still fledgling and growing. As such, our understanding of factors shaping CPR is limited. This thesis contains three essays that examine the antecedents of CPR, proxied through political spending disclosure (PSD), in S&P 500 firms and deepens our understanding of drivers of CPR.
The first essay examines the link between ownership structure and PSD. Using a unique dataset provided by CPA-Zicklin for PSD and a panel dataset from S&P 500 companies between 2015 and 2018, the results reveal that institutional and governmental ownership are positively associated with the level of PSD, while insider ownership is negatively associated with the level of PSD. Additionally, the cross-sectional tests provide evidence that insider owners exhibit more PSD if they are pursing tax-related lobbying expenses and tax avoidance practices. Additionally, governmental owners demand lower PSD in firms with higher nonfinancial and financial reporting quality. Finally, institutional owners demand more PSD in the case of lower industry concentration.
The second essay investigates the pivotal policy question of whether corporate governance influences PSD. Using a sample of S&P 500 firms from 2011 to 2019, I provide the following results. First, extending agency theory-driven expectations, the study provides evidence on the monitoring role of the board emanating from female monitoring directors, non-excessive board tenure, audit committee (AC) size, AC meetings, and AC education in enhancing PSD. Second, extending resource dependence theory, the study provides evidence on the advisory role of the board emanating from female advisory directors, CEO duality, additional directorships, AC size, AC meetings, AC age, and AC education in promoting PSD. As such, my dual theoretical approach comprehensively recognizes the dual roles that board members play in promoting PSD.
The third essay investigates how political risks, political strategy, and institutional blockholders’ political spending influence PSD. Using a panel dataset from S&P 500 companies between 2011 and 2019, I show that firms with higher levels of political risks exhibit higher levels of PSD. I also show that the intensity of corporate political strategy and the utilization of revolving door lobbyists are positively associated with PSD. Additionally, I provide evidence that blockholders’ political spending is negatively associated with PSD and such negative association is less pronounced in firms with robust governance structures. Finally, firms led by Republican institutional blockholders exhibit less transparent PSD.
The research’s empirical findings are largely in line with the predications of agency, resource dependence, and legitimacy theories. Overall, the study contributes to disclosure, corporate governance, and corporate political activity literatures.
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