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Measuring Rates of Return for Lobbying Expenditures: An Empirical Case Study of Tax Breaks for Multinational Corporations

36 PagesPosted: 10 Apr 2009Last revised: 19 Jun 2012

See all articles by Raquel Meyer Alexander

Raquel Meyer Alexander

Freeman College of Management

Stephen W. Mazza

University of Kansas - School of Law

Susan Scholz

University of Kansas - Accounting and Information Systems Area

Date Written: April 8, 2009

Abstract

In this paper we use audited corporate tax disclosures relating to a tax holiday on repatriated earnings created by the American Jobs Creation Act of 2004 to examine the return on lobbying. We find firms lobbying for this provision have a return in excess of $220 for every $1 spent on lobbying, or 22,000%. Repatriating firms are more profitable overall, but surprisingly, profitability is not a predictor of repatriation amount. Rather, industry and firm size are most predictive of repatriation. Cash on hand, a proxy for ability to repatriate, is not associated with the repatriation decision or the repatriation amount. This paper provides compelling evidence that lobbying expenditures have a positive and significant return on investment.

Keywords: Multinational Firms, Corporate Taxation, Repatriation, Lobbying

JEL Classification: F23, H20, H25, K34

Suggested Citation:Suggested Citation

Alexander, Raquel Meyer and Mazza, Stephen W. and Scholz, Susan, Measuring Rates of Return for Lobbying Expenditures: An Empirical Case Study of Tax Breaks for Multinational Corporations (April 8, 2009). Journal of Law and Politics, Vol. 25, No. 401, 2009, Available at SSRN:https://ssrn.com/abstract=1375082 orhttp://dx.doi.org/10.2139/ssrn.1375082

Raquel Meyer Alexander

Freeman College of Management (email )

701 Moore Ave.
Lewisburg, PA 17837
United States

Stephen W. Mazza (Contact Author)

University of Kansas - School of Law

University of Kansas - School of Law (email )

Green Hall
1535 W. 15th Street
Lawrence, KS 66045-7577
United States

Susan Scholz

University of Kansas - Accounting and Information Systems Area (email )

1300 Sunnyside Ave
Lawrence, KS 66045
United States
785-864-7554 (Phone)
785-864-5328 (Fax)

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