The Influence of Ownership Structure on How Firms Make Corporate Political Strategy Choices
Mine Ozer and Ekin Alakent
Business Society published 15 November 2012, 10.1177/0007650312466041
http://bas.sagepub.com/cgi/content/abstract/0007650312466041v1
This study integrates the research on corporate political strategy and corporate governance. Using the agency theory perspective, this study examines how corporate governance mechanisms such as institutional ownership, insider ownership, and long-term executive compensation affect a firm's political strategy approach. This study proposes that an agency problem may occur between owners and managers in regard to firms' approach to corporate political strategy. Since a relational approach to corporate political strategy, such as establishing a government relations office in <st1:place w:st="on"><st1:city w:st="on">Washington</st1:city>, <st1:state w:st="on">DC</st1:state></st1:place>, requires significant resource commitments without guaranteeing a favorable policy change, shareholders might be reluctant to approve such an approach. In a sample of 3,417 <st1:country-region w:st="on"><st1:place w:st="on">U.S.</st1:place></st1:country-region> manufacturing firms, over 5 years of data, the results show that institutional ownership and insider ownership are negatively associated with firms' propensity to engage in a relational approach to political strategy.
Duane Windsor, BAS Editor, <st1:place w:st="on"><st1:placename w:st="on">Rice</st1:placename> <st1:placetype w:st="on">University</st1:placetype></st1:place>, odw@rice.edu
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