Return on political investment in the American Jobs Creation Act of 2004
By: Hui Chen, Katherine Gunny, Karthik Ramanna
Contributors: Gunny, Katherine, author; Ramanna, Karthik, author; Harvard Business School
Series: Working paper / Harvard Business School -- 15-050; Working paper (Harvard Business School) -- 15-050
Publisher: Harvard Business School
Published: 2014
Place of publication: Boston]
Language: eng
Number of pages: 48
Description: Prior literature raises a "puzzle" of high rates of return on corporate political investment, but evidence for this puzzle is largely descriptive in nature. We exploit the setting of the American Jobs Creation Act's passage in 2004 to provide more robust estimates of political returns based on instrumentation in a two-stage regression model. We find for the median sample firm that an increase of $1 million in lobbying spending is associated with about $32.35 million in taxes saved. These estimates, while consistent with a high-returns "puzzle," are nearly an order of magnitude lower than those previously reported via descriptive methods.
Notes: "December 2014" -- Publisher's website.

Includes bibliographical references (pages 34-36).