{"title":"See you in court? The (un)intended legal consequences of corporate political connections","authors":"Michael Hadani","doi":"10.1111/basr.12367","DOIUrl":null,"url":null,"abstract":"<p>Research on corporate political connections has long focused on their strategic and financial outcomes. Yet, most of this research has avoided exploring the downstream risks associated with such connections, in particular, legal risks. The buffering nature of political connections, aimed at reducing sociopolitical uncertainty, as well as their potential to provide public policy benefits and protection, may cause politically connected firms to be more insular and less sensitive in their obligations and commitments to firm outsiders and thus be targeted for lawsuits. Exploring the S & P 1000 firms for 16 years and controlling for other aspects of political activity, across different analytical approaches, I find consistent evidence that corporate political connections are associated with lawsuits and associated with corporate-governance-related lawsuits. I further document that the monitoring and disciplining presence of equity blockholders moderates the association between political connections and lawsuits. The findings shed a novel light on the need to explore downstream legal risks, associated with politically connected firms, and the potential legal costs of political ties.</p>","PeriodicalId":46747,"journal":{"name":"BUSINESS AND SOCIETY REVIEW","volume":null,"pages":null},"PeriodicalIF":1.8000,"publicationDate":"2024-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"BUSINESS AND SOCIETY REVIEW","FirstCategoryId":"1085","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/basr.12367","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
Research on corporate political connections has long focused on their strategic and financial outcomes. Yet, most of this research has avoided exploring the downstream risks associated with such connections, in particular, legal risks. The buffering nature of political connections, aimed at reducing sociopolitical uncertainty, as well as their potential to provide public policy benefits and protection, may cause politically connected firms to be more insular and less sensitive in their obligations and commitments to firm outsiders and thus be targeted for lawsuits. Exploring the S & P 1000 firms for 16 years and controlling for other aspects of political activity, across different analytical approaches, I find consistent evidence that corporate political connections are associated with lawsuits and associated with corporate-governance-related lawsuits. I further document that the monitoring and disciplining presence of equity blockholders moderates the association between political connections and lawsuits. The findings shed a novel light on the need to explore downstream legal risks, associated with politically connected firms, and the potential legal costs of political ties.
长期以来,对企业政治联系的研究主要集中在其战略和财务结果上。然而,大多数研究都避免探讨与这种联系相关的下游风险,尤其是法律风险。政治联系的缓冲性质旨在减少社会政治的不确定性,同时也有可能提供公共政策利益和保护,这可能会导致与政治有联系的公司更加孤僻,对公司外部人的义务和承诺不那么敏感,从而成为诉讼的目标。在对 S & P 1000 强企业进行了 16 年的调查并控制了政治活动的其他方面后,通过不同的分析方法,我发现了一致的证据,即企业的政治联系与诉讼相关,并且与企业治理相关的诉讼相关。我还进一步证明,股权封锁股东的监督和约束作用缓和了政治关系与诉讼之间的关联。这些发现揭示了探索与政治关联公司相关的下游法律风险以及政治关联的潜在法律成本的必要性。
期刊介绍:
Business and Society Review addresses a wide range of ethical issues concerning the relationships between business, society, and the public good. Its contents are of vital concern to business people, academics, and others involved in the contemporary debate about the proper role of business in society. The journal publishes papers from all those working in this important area, including researchers and business professionals, members of the legal profession, government administrators and many others.