Does Common Ownership Influence Firms’ Political Activities? Empirical Evidence from Lobbying in the US Pharmaceutical Industry

Event Date: 28 February 2024

Speaker: Professor Neslihan Ozkan, University of Bristol

Venue: Strathclyde Business School, Cathedral Wing, CW506A

Time: 2pm

Abstract:

We find that common ownership has a significantly negative impact on US pharmaceutical firms’ lobbying activities, highlighting the role of common owners in improving lobbying efficiency. This efficiency stems from the common owners’ efforts to coordinate portfolio firms’ sharing of lobbying resources. Further, our results show that commonly held firms increase their lobbying when they attempt to evergreen their patents. This finding is consistent with the view that common owners can enhance their portfolio firms’ access to lobbying resources when they have a firm-specific need for lobbying. Similarly, commonly held firms increase their lobbying when targeting a high number of congressional bills, which can be interpreted as common ownership inducing coordination among their portfolio firms to influence legislation that might affect the industry as a whole.  Overall, we uncover a new channel, ‘political lobbying’, through which common owners can influence product market outcomes of their portfolio firms.

Published: 22 February 2024