IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v54y2016icp61-69.html
   My bibliography  Save this article

Lobbying, political connectedness and financial performance in the air transportation industry

Author

Listed:
  • Brown, Richard S.

Abstract

While there is a deeper understanding of the outcomes to firm-level political activities in general, there are very few papers that address this relationship in transportation studies. In this paper, I empirically test firm-level rent-seeking through corporate political activity (CPA) in the air transportation industry. I find, in a sample of 46 firms over 15 years, that lobbying intensity and political connections are positively related to subsequent profitability in both fixed-effects and random-effects estimations. I also test the interaction of these two main effects and find mixed support for the moderating effect of political connections on lobbying intensity. This paper contributes to the theoretical literature on political rent-seeking and the topical literature on political action in air transportation.

Suggested Citation

  • Brown, Richard S., 2016. "Lobbying, political connectedness and financial performance in the air transportation industry," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 61-69.
    • Handle: RePEc:eee:jaitra:v:54:y:2016:i:c:p:61-69
    DOI: 10.1016/j.jairtraman.2016.03.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699716300266
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2016.03.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Simonelli, Felice & Caroli, Matteo Giuliano, 2013. "Harmonization of market entry regulation for the operation of air services in the European Union: A comparative survey of the implementation of Regulation (EC) no. 1008/2008 by Member States' authorit," Journal of Air Transport Management, Elsevier, vol. 27(C), pages 39-45.
    2. Brach, Ann & Wachs, Martin, 2005. "Earmarking in the US Department of Transportation Research Programs," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(6), pages 501-521, July.
    3. Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
    4. Bettini, Humberto F.A.J. & Oliveira, Alessandro V.M., 2008. "Airline capacity setting after re-regulation: The Brazilian case in the early 2000s," Journal of Air Transport Management, Elsevier, vol. 14(6), pages 289-292.
    5. Hadani, Michael, 2012. "Institutional ownership monitoring and corporate political activity: Governance implications," Journal of Business Research, Elsevier, vol. 65(7), pages 944-950.
    6. Charlton, Andrew, 2009. "Airport regulation: Does a mature industry have mature regulation?," Journal of Air Transport Management, Elsevier, vol. 15(3), pages 116-120.
    7. Seung-Hyun Lee & Yoon-Suk Baik, 2010. "Corporate Lobbying in Antidumping Cases: Looking into the Continued Dumping and Subsidy Offset Act," Journal of Business Ethics, Springer, vol. 96(3), pages 467-478, October.
    8. J. H. Wesseling & E. M. M. I. Niesten & J. Faber & M. P. Hekkert, 2015. "Business Strategies of Incumbents in the Market for Electric Vehicles: Opportunities and Incentives for Sustainable Innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 24(6), pages 518-531, September.
    9. Littlechild, Stephen C., 2012. "German airport regulation: Framework agreements, civil law and the EU Directive," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 63-75.
    10. Littlechild, Stephen C., 2012. "Australian airport regulation: Exploring the frontier," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 50-62.
    11. King, Gary & Roberts, Margaret E., 2015. "How Robust Standard Errors Expose Methodological Problems They Do Not Fix, and What to Do About It," Political Analysis, Cambridge University Press, vol. 23(2), pages 159-179, April.
    12. Ballart, Xavier & Güell, Casilda, 2015. "Airport ownership and regulation in Spain: Explaining the resistance to change," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 112-118.
    13. Amy J. Hillman & Asghar Zardkoohi & Leonard Bierman, 1999. "Corporate political strategies and firm performance: indications of firm‐specific benefits from personal service in the U.S. government," Strategic Management Journal, Wiley Blackwell, vol. 20(1), pages 67-81, January.
    14. Domingues, Sérgio & Macário, Rosário & Pauwels, Tom & Van de Voorde, Eddy & Vanelslander, Thierry & Vieira, João, 2014. "An assessment of the regulation of air cargo security in Europe: A Belgian case study," Journal of Air Transport Management, Elsevier, vol. 34(C), pages 131-139.
    15. Guilhem Bascle, 2008. "Controlling for endogeneity with instrumental variables in strategic management research," Post-Print hal-00576795, HAL.
    16. Balla, Steven J., 1998. "Administrative Procedures and Political Control of the Bureaucracy," American Political Science Review, Cambridge University Press, vol. 92(3), pages 663-673, September.
    17. Paul Brockman & Oliver M Rui & Huan Zou, 2013. "Institutions and the performance of politically connected M&As," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(8), pages 833-852, October.
    18. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    19. Carlsson, Fredrik & Hammar, Henrik, 2002. "Incentive-based regulation of CO2 emissions from international aviation," Journal of Air Transport Management, Elsevier, vol. 8(6), pages 365-372.
    20. Martin, Cathie Jo, 1995. "Nature or Nurture? Sources of Firm Preference for National Health Reform," American Political Science Review, Cambridge University Press, vol. 89(4), pages 898-913, December.
    21. Arblaster, Margaret, 2014. "The design of light-handed regulation of airports: Lessons from experience in Australia and New Zealand," Journal of Air Transport Management, Elsevier, vol. 38(C), pages 27-35.
    22. Tomaso Duso, 2005. "Lobbying and regulation in a political economy: Evidence from the U.S. cellular industry," Public Choice, Springer, vol. 122(3), pages 251-276, March.
    23. MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
    24. Antonson, Hans, 2014. "Public participation and written submissions: A transport infrastructure planning case study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 70(C), pages 59-66.
    25. Blau, Benjamin M. & Brough, Tyler J. & Thomas, Diana W., 2013. "Corporate lobbying, political connections, and the bailout of banks," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 3007-3017.
    26. Ozer, Mine, 2010. "Top management teams and corporate political activity: Do top management teams have influence on corporate political activity?," Journal of Business Research, Elsevier, vol. 63(11), pages 1196-1201, November.
    27. Amy McKay, 2011. "The decision to lobby bureaucrats," Public Choice, Springer, vol. 147(1), pages 123-138, April.
    28. John C Frain, 2010. "Introduction to STATA with Econometrics in Mind," Trinity Economics Papers tep0210, Trinity College Dublin, Department of Economics.
    29. Beck, Nathaniel & Katz, Jonathan N., 2007. "Random Coefficient Models for Time-Series—Cross-Section Data: Monte Carlo Experiments," Political Analysis, Cambridge University Press, vol. 15(2), pages 182-195, April.
    30. Boehmke, Frederick J. & Gailmard, Sean & Patty, John W., 2013. "Business as usual: interest group access and representation across policy-making venues," Journal of Public Policy, Cambridge University Press, vol. 33(1), pages 3-33, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Woon Leong Lin, 2018. "Do Firm’s Organisational Slacks Influence the Relationship between Corporate Lobbying and Corporate Financial Performance? More Is Not Always Better," IJFS, MDPI, vol. 7(1), pages 1-23, December.
    2. Gerben de Jong & Christiaan Behrens & Hester van Herk & Erik Verhoef, 2019. "Domestic Market Power in the International Airline Industry," Transportation Science, INFORMS, vol. 53(3), pages 796-810, May.
    3. William Morrison, Jaap de Wit, 2017. "US Open Skies Agreements and Unlevel Playing Fields," LCERPA Working Papers 0104, Laurier Centre for Economic Research and Policy Analysis, revised 01 Aug 2017.
    4. Woon Leong Lin, 2021. "Giving too much and paying too little? The effect of corporate social responsibility on corporate lobbying efficacy: Evidence of tax aggressiveness," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(2), pages 908-924, March.
    5. Brown, Richard S. & Kline, William A., 2020. "Exogenous shocks and managerial preparedness: A study of U.S. airlines’ environmental scanning before the onset of the COVID-19 pandemic," Journal of Air Transport Management, Elsevier, vol. 89(C).
    6. Morrison, William G. & de Wit, Jaap, 2019. "US open skies agreements and unlevel playing fields," Journal of Air Transport Management, Elsevier, vol. 74(C), pages 30-38.
    7. Woon Leong Lin, 2019. "Is Corporate Political Activity an Investment or Agency? An Application of System GMM Approach," Administrative Sciences, MDPI, vol. 9(1), pages 1-22, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.
    2. Woon Leong Lin, 2018. "Do Firm’s Organisational Slacks Influence the Relationship between Corporate Lobbying and Corporate Financial Performance? More Is Not Always Better," IJFS, MDPI, vol. 7(1), pages 1-23, December.
    3. Brown Richard S., 2016. "How do firms compete in the non-market? The process of political capability building," Business and Politics, De Gruyter, vol. 18(3), pages 263-295, October.
    4. Shantanu Banerjee & Sunil Venaik, 2018. "The Effect of Corporate Political Activity on MNC Subsidiary Legitimacy: An Institutional Perspective," Management International Review, Springer, vol. 58(5), pages 813-844, October.
    5. Hadani, Michael & Dahan, Nicolas M. & Doh, Jonathan P., 2015. "The CEO as chief political officer: Managerial discretion and corporate political activity," Journal of Business Research, Elsevier, vol. 68(11), pages 2330-2337.
    6. Liedong, Tahiru Azaaviele & Aghanya, Daniel & Jimenez, Alfredo & Rajwani, Tazeeb, 2023. "Corporate political activity and bribery in Africa: Do internet penetration and foreign ownership matter?," Journal of Business Research, Elsevier, vol. 154(C).
    7. Jessica L. Darby & David J. Ketchen & Brent D. Williams & Travis Tokar, 2020. "The Implications of Firm‐Specific Policy Risk, Policy Uncertainty, and Industry Factors for Inventory: A Resource Dependence Perspective," Journal of Supply Chain Management, Institute for Supply Management, vol. 56(4), pages 3-24, October.
    8. Yik-Pui Low, Steven & Foo, Yee-Boon & Gul, Ferdinand A, 2023. "Corporate lobbying: Resource-seeking or rent-seeking? Evidence from audit fees," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(1).
    9. Christopher Marquis & Cuili Qian, 2014. "Corporate Social Responsibility Reporting in China: Symbol or Substance?," Organization Science, INFORMS, vol. 25(1), pages 127-148, February.
    10. Greiner, Michael & Kim, Jaemin & Cordon Thor, Jennifer, 2023. "Narcissistic CEOs and their corporate political activity," Journal of Business Research, Elsevier, vol. 163(C).
    11. Thanh Ngo & Jurica Susnjara, 2020. "Government contracts and US bond yield spreads: A study on costs and benefits of materialized political connections," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(7-8), pages 1059-1085, July.
    12. Greiner, Michael & Kim, Jaemin & Cordon Thor, Jennifer, 2023. "CEO values as antecedents to corporate political activity: An empirical exploration," Journal of Business Research, Elsevier, vol. 160(C).
    13. Yang Liu & Weiqi Dai & Mingqing Liao & Jiang Wei, 2021. "Social Status and Corporate Social Responsibility: Evidence from Chinese Privately Owned Firms," Journal of Business Ethics, Springer, vol. 169(4), pages 651-672, April.
    14. Karavitis, Panagiotis & Kazakis, Pantelis, 2022. "Political sentiment and syndicated loan borrowing costs of multinational enterprises," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 78(C).
    15. Gounopoulos, Dimitrios & Kallias, Antonios & Kallias, Konstantinos & Tzeremes, Panayiotis G., 2017. "Political money contributions of U.S. IPOs," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 19-38.
    16. Gounopoulos, Dimitrios & Mazouz, Khelifa & Wood, Geoffrey, 2021. "The consequences of political donations for IPO premium and performance," Journal of Corporate Finance, Elsevier, vol. 67(C).
    17. Sharma, Piyush & Cheng, Louis T.W. & Leung, T.Y., 2020. "Impact of political connections on Chinese export firms' performance – Lessons for other emerging markets," Journal of Business Research, Elsevier, vol. 106(C), pages 24-34.
    18. Rajwani, Tazeeb & Liedong, Tahiru Azaaviele, 2015. "Political activity and firm performance within nonmarket research: A review and international comparative assessment," Journal of World Business, Elsevier, vol. 50(2), pages 273-283.
    19. Mingyi Hung & Yongtae Kim & Siqi Li, 2018. "Political connections and voluntary disclosure: Evidence from around the world," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(3), pages 272-302, April.
    20. Adelino, Manuel & Dinc, I. Serdar, 2014. "Corporate distress and lobbying: Evidence from the Stimulus Act," Journal of Financial Economics, Elsevier, vol. 114(2), pages 256-272.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:54:y:2016:i:c:p:61-69. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.