The Relationship between Corporate Political Strategy of Public Partnership and Corporate Investment

Abstract

This research endeavors to elucidate the dynamics between Corporate Political Activity (CPA) and corporate investment by harnessing advanced econometric techniques, specifically quantile regression and dynamic panel data analysis. The empirical investigation encompasses a comprehensive dataset of 368 entities listed in Fortune World's Most Admired Companies spanning from 2016 to 2022. The empirical results illuminate the intricate relationship between CPA and corporate investment, indicating that firms engaging in politically strategic maneuvers typically demonstrate elevated investment rates in comparison to their counterparts devoid of such political strategization. Notably, this inquiry unveils a complex pattern, whereby CPA exerts a detrimental impact on corporate investment at superior quantiles (notably, the 80th and 90th percentiles), whereas an inverse effect is observed at the lower quantiles (specifically, the 10th and 20th percentiles). Furthermore, the analysis delineates an inverted V-shaped correlation between CPA and corporate investment, suggesting a nuanced interaction that varies across different levels of investment intensity. In examining firm-specific attributes, the influence of CPA on corporate investment appears to attenuate in entities characterized by substantial size and robust economic and technical prowess. Such firms exhibit diminished dependency on governmental support for their investment ventures, highlighting the differential impact of CPA based on firm-specific characteristics and strategic dispositions.