Corporate lobbying in Brussels

: impact of direct and indirect lobbying strategies on firm profitability

Abstract

Lobbying is today a multimillion-dollar global industry, responsible for sharing of information, expertise, and network of relations. The returns on corporate lobbying is one topic of concern for managers and academics alike. Nonetheless, international literature is divided in whether lobbying brings more benefits than costs, and European research has insufficient literature on the corporate financial implications of lobbying in Brussels. This study aims to understand whether lobbying improves firm profitability, as measured by ROA and ROE, for a 300-company sample via OLS cross-sectional and First Effects and First Differenced estimators panel analysis. By including the most relevant direct and indirect lobbying strategies from qualitative literature such as establishment of a Brussels office or hiring a professional intermediary, the goal is to understand how different routes contribute to financial benefit. This study does not find solid evidence to support the claim that lobbying firms perform better. However, hiring a ‘revolving door’ lobbyist (as measured by an access proxy) reports a significant positive effect on ROA. Separate reporting for results including and excluding sample outliers provides some robustness to the findings. This report contributes to literature by testing the profitability impact of several lobbying strategies at EU level for a sample of public and private firms, and for providing an initial insight into lobbying effort returns for different time lags.

Date of Award	14 Oct 2020
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Patrycja Rozbicka (Supervisor)