Why Shouldn’t You Invest in Companies with Revolving Door Lobbyists?

Abstract

This article analyzes the effect on firm value of having former government officials as lobbyists. The results suggest that the number of “revolving door” lobbyists is negatively correlated with firm value. The authors find that firm value decreases as the number of revolving door lobbyists employed by a firm increases. The results suggest that high numbers of such lobbyists are an indicator of wider agency problems in the firm.