Ownership Structure and Political Spending Disclosure

Ali, Hesham; Adegbite, Emmanuel; Nguyen, Tam Huy

Abstract

This study examines the link between ownership structure and political spending disclosure (PSD). We break down ownership into four different groups of shareholders: institutional, insider, governmental and foreign. Using a unique dataset provided by CPA-Zicklin for PSD and a panel dataset from S&P 500 companies between 2015 and 2018, our results reveal that institutional and governmental ownership are positively associated with the level of PSD, while insider ownership is negatively associated with the level of PSD. Additionally, while prior literature mainly investigated how ownership structure influences disclosure practices, we analyse the mechanisms through which ownership characteristics influence PSD. Our cross-sectional tests provide evidence that insider owners exhibit more PSD if they are pursing tax-related lobbying expenses and tax avoidance practices. Additionally, governmental owners demand lower PSD in firms with higher nonfinancial and financial reporting quality. Finally, institutional owners demand more PSD in the case of lower industry concentration. Overall, we conclude that different owners have distinct impacts and preferences on a firm’s political strategy and various mechanisms uniquely operationalize the interactions between different owners and political transparency. Through agency theory, our results advance heated debates on PSD – an emerging, yet hitherto less examined, category of voluntary disclosure.

Citation

Ali, H., Adegbite, E., & Nguyen, T. H. (2022). Ownership Structure and Political Spending Disclosure. Accounting Forum, 46(2), 160-190. https://doi.org/10.1080/01559982.2021.1929006

• Journal Article Type: Article
• Acceptance Date: May 7, 2022
• Online Publication Date: Aug 8, 2022
• Publication Date: 2022
• Deposit Date: Nov 4, 2022
• Publicly Available Date: Nov 7, 2022
• Journal: Accounting Forum
• Print ISSN: 0155-9982
• Electronic ISSN: 1467-6303
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 46
• Issue: 2
• Pages: 160-190
• DOI: https://doi.org/10.1080/01559982.2021.1929006
• Public URL: https://nottingham-repository.worktribe.com/output/13179488
• Publisher URL: https://www.tandfonline.com/doi/full/10.1080/01559982.2021.1929006