focalinterest.net

Tag: General (Politics & Governance)

  • Political ideology divergence is linked to more ESG engagement

    What the study found

    The study found that greater political ideology divergence, meaning the absolute ideological distance between an entrepreneur and state governance, is associated with increased entrepreneurial firm engagement in environmental, social, and governance (ESG) practices. It also found that research and development (R&D) investment and lobbying can weaken this relationship.

    Why the authors say this matters

    The authors conclude that the findings shift attention in research on the political economy of entrepreneurship from institutional constraints to entrepreneurial agency. They suggest this helps explain how entrepreneurs interpret and strategically respond to political ideology divergence.

    What the researchers tested

    The researchers studied entrepreneur-led firms in the United States from 2010 to 2020. They used longitudinal data from 605 firms and examined how political ideology divergence related to ESG engagement, along with the roles of R&D investment and lobbying.

    What worked and what didn't

    The analysis found that larger political ideology divergence was associated with more ESG engagement at the firm level. It also found that R&D investment and lobbying moderated this relationship by attenuating the association between divergence and ESG engagement.

    What to keep in mind

    The abstract describes a U.S. sample of entrepreneur-led firms, so the findings are limited to that setting. No additional limitations are described in the available summary.

    • Political ideology divergence is defined as the absolute ideological distance between an entrepreneur and state governance.
    • Greater divergence was associated with more firm engagement in ESG practices.
    • R&D investment and lobbying weakened the association between divergence and ESG engagement.
    • The study used longitudinal data from 605 entrepreneur-led U.S. firms from 2010 to 2020.
    • The authors say the findings highlight entrepreneurial agency in response to political ideology divergence.

  • Political donations are linked to lower cash holdings and investment efficiency

    What the study found

    The study found that political donations were negatively associated with cash holdings and investment efficiency, and positively associated with leverage. The authors report these patterns as evidence of agency concerns regarding political donations in Australia.

    Why the authors say this matters

    The authors conclude that the findings add to understanding of how political donations relate to corporate financial decision-making. They suggest the results matter because they show links between donations and outcomes such as cash holdings, leverage, and investment efficiency.

    What the researchers tested

    The researchers analyzed publicly available political donation data from the Australian Electoral Commission. Their sample included the top 300 firms listed on the Australian Stock Exchange from 2006 to 2022, giving 3,404 firm-year observations, and they used multivariate ordinary least squares regression along with Heckman selection, entropy balancing, and two-stage least squares tests.

    What worked and what didn't

    The results showed a negative correlation between political donations and cash holdings. They also showed a positive correlation with leverage and a negative relationship with investment efficiency. The authors report that these results remained robust after additional tests and correction for endogeneity issues.

    What to keep in mind

    The abstract does not describe limitations in detail. The study is limited to large Australian listed firms and uses observational data, so the reported relationships are associations rather than direct causal claims.

    • Political donations were negatively associated with cash holdings.
    • Political donations were positively associated with leverage.
    • Political donations were negatively associated with investment efficiency.
    • The study used 3,404 firm-year observations from the top 300 Australian Stock Exchange firms.
    • The authors say the results support concerns about agency costs.