Working papers

Corporate lobbying and US federal grants: Information in exchange for compensation

This paper examines the effect of firms' lobbying activities on US federal grants. My model indicates that firms lobbying the granting agency during the grant allocation process have 6.96 times bigger odds to get a federal award. The main results are robust across measures of lobbying, and account for endogeneity concerns by employing instrumental variable strategies. I also observe that federal grants are more responsive to lobbying expenditures to the granting agency when (1) firms show less unethical behaviors, (2) federal grant amounts are less transparent and (3) assets a more opaque. In addition, I find that firms receiving more federal grants tend to have lower cost of debt and higher CEO compensation, without being able to show higher firm performance. Overall, these results appear consistent with the informational lobbying theory, at the regulator level, and a self-serving behavior, at the management level.

Presented @ LAVG (Marseille, 2023), UCLouvain-Saint-Louis Brussels (Brussels, 2022), Econometric Society - Delhi School of Economics (online, 2020), UCLouvain (online, 2020) and UCLouvain-Saint-Louis Brussels (online, 2020).

Lobbying  and  cartel enforcement (with Girard, A. and Gnabo, J-Y.)

This paper examines the effect of firms’ lobbying activities on penalties received from public competition authorities. We show that lobbying expenditures are negatively associated with the amount of the cartel sanction, across and within cartel. Our estimates also report that cartel sanctions are more responsive to lobbying expenditures when the lobbying firm qualifies for the leniency program. If we consider lobbying expenditures as a proxy for informativeness, more uncertainty in uncovering the cartel incentivises the antitrust authority to reduce the cartel sanction in exchange of lobby.

Presented @ LACEA conference (Bogota, 2023), DeFiPP seminar UNamur (Namur, 2022), DG Competition - Chief Economist Team seminar (Brussels, 2022), AMSE conference (Marseille, 2022), ECARES PhD seminar (Brussels, 2022), RSM doctoral seminar (Rotterdam, 2021), Benelux Corporate Finance Network seminar (online, 2021), CRESSE (Heraklion, 2021), INFER (online, 2020), RGS (Dortmund, 2020), WIPE (Reus, 2020), UCLouvain (LLN, 2019) and UCLouvain-Saint-Louis Brussels (Brussels, 2019).

Leniency policy in hub and spoke cartels (with Buts, C., Jegers, M. and Vander Vennet, N.)

The competition literature documents that leniency programs can either destabilize or reinforce the sustainability of horizontal cartels. We contribute to this body of literature by looking at a specific type of cartels, namely hub and spoke cartels: horizontal collusions between spokes facilitated by, at least, one party operating at a different level of the supply chain, the hub. Drawing on earlier work of Van Cayseele and Miegielsen (2013) on hub and spoke cartels, and Chen and Rey’s dynamic leniency model for horizontal cartels (2013), this paper builds a model that measures the impact of leniency programs on hub and spoke cartels. We show that it is always desirable to offer some ex-ante leniency to the first-reporting hub-and-spoke cartel member to discourage cartel formation and assess the optimal leniency rate for both the hub and spokes. We then compare these results with the situation where the hub is excluded from the leniency program and argue that including the hub increases this program’s efficiency in discouraging cartel formation, suggesting that EU leniency programs (which allow the ringleader to benefit from leniency) are more effective than US ones (which do not). 

Presented @ BER seminar (Stellenbosch University, 2019), LCII brown bag seminar (ULiege, 2019), CORE brown bag seminar (UCLouvain, 2018),  VUB lunch seminar (Brussels, 2018), UCLouvain-Saint-Louis Brussels (Brussels, 2018), CRESSE (Rethymnon, 2015).

Corporate lobbying and firm performance (with Girard, A. and Gnabo, J-Y.)

Evidence are surprisingly mixed regarding the influence of lobbying on the overall firm performance. This paper documents that the sensitivity of these empirical results comes from the use of different measures of firm size. We assess the change in results using different proxies of firm size and replicating models from the corporate finance literature. The estimates show that this discrepancy in the results is driven by an omitted variable bias explained by the non-interchangeability of firm size proxies. Addressing the omitted variable concerns, our results report a positive association between lobbying expenditures and firm performance, within industry. This paper also indicates that lobbying expenditures influence positively the firm performance variability, which is in line with the moral hazard literature.

Presented @ Universidad de Los Andes School of Management Seminar (online, 2023), FFA (Bordeaux, 2023), Belgian Forum of Finance (Brussels, 2023), UCLouvain (LLN, 2022) and UCLouvain-Saint-Louis Brussels (Brussels, 2022).

Relative lobbying and risk-taking incentives (with Girard, A., Gnabo, J-Y., and Mantilla-Garcia, D.)

This paper studies how lobbying affects managers' risk-taking incentives. Firms that invest in lobbying are effectively buying downside protection for their owners. To make the most of that investment in ``insurance'', lobbying firm owners should encourage their managers to take more risk. Consistent with this hypothesis, we observe that firms with higher lobbying expenditures than their sector peers, award more option-based compensation to their managers. Applying a control function methodology, we find that these results are robust to endogeneity issues. As additional robustness checks, using two proxies for risk-taking, i.e., earnings standard deviation and the ROA variability, we find that lobbying managers take riskier investment decisions.

Presented @ Universidad de Los Andes School of Management AGORA Seminar (Bogota, 2023), Belgian Forum of Finance (Brussels, 2023), UCLouvain (LLN, 2022) and UCLouvain-Saint-Louis Brussels (Brussels, 2023).


Corporate lobbying and firm performance variability (with Girard, A. and Gnabo, J-Y.) Finance Research Letters, 2023, 58, 104524.

This paper is the first to provide empirical evidence that higher lobbying expenditures are associated with higher operational performance variability. Using data from S&P1500 firms over the 2000–2020 period, our estimates indicate a positive relationship between lobbying expenditures and the variability of return on asset and return on equity. Addressing the endogeneity concerns by applying a control function approach, we find results consistent with the view that the management of lobbying firms takes riskier investment decisions.

Firm performance and the crowd effect in lobbying competition (with Girard, A. and Gnabo, J-Y.) Finance Research Letters, 2023,  53, 103618.

This paper connects with the Tullock paradox on why is there so little money in politics. Exploiting data on S&P500 firms over the 2000-2019 period, we use polynomial and B-spline non-parametric models to show that relative lobbying expenditures and firm performance have an inverted-N relationship. To account for the competitive aspect of lobbying, our main variable is defined as the ratio between firm's lobbying expenditures and the average sectoral lobbying. Firms that either do not lobby enough or lobby too much compared to their lobbying competitors have a negative marginal impact on their performance, which might partly explain the Tullock paradox at the intensive margin. This result is robust to endogeneity concerns that we treat using GMM and control function methodologies.

Hub and Spoke Cartels: Incentives, Mechanisms and Stability (with Buts, C.) European Competition and Regulatory Law Review (CoRe), 2019, 3(1), 4-16.

A hub and spoke cartel entails both horizontal collusive behavior and the involvement of at least one member operating at a different level of the supply chain. The blend of vertical and horizontal restraints raises both economic and legal questions. This article explores the main determinants for the existence of hub and spoke cartels. Based on twelve cases, we first build a typology and analyse three types of hub and spoke cartels. We focus on the structure of the cartel, the collusive mechanism and the economic incentives of participants. For each type, we thus discuss the elements that are necessary to fix the anticompetitive cooperation. In a second phase, we present descriptive statistics on the number of players, on cartel duration and on the length of investigations. Finally, we present a brief generalized summary for two main H&S cartel types. The purpose is to gain a better understanding of the hub and spoke cartel phenomenon.

Work in progress

“Subsidies competition in the US” (with Pierre Regibeau, European Commission)

“Common ownership and lobbying” (with Fiona Kasperk, Oxford University)

Merger decisions and licensing” (with Logan Emery, Erasmus University)

Venture capital investments and political connections” (with Gianluca Gucciardi, Bicocca University)

Corporate violations, sanctions and reporting” (with Norma Ortiz, Los Andes University)

Too big to be punished” (with Miguel Martinez, Los Andes University)

Comprendre les dynamiques économiques et de colonialité qui endiguent la décolonisation de la santé publique : construction d’un cadre conceptuel à l’aide d’une revue de la littérature (with Yasmine  El Addouli, Kit Royal Tropical Institute & Sherihane Bensemmane, Sciensano)