Political Cross-Border M&A

• In Event: Firms in International Political Economy

Abstract

Can multinational corporations (MNCs) gain a political foothold in other countries through their foreign direct investment (FDI)? Despite numerous studies attesting to the political influence of MNCs in their home countries, less is known about how they become globally influential. I investigate this question by examining changes in the political activities of American firms that go through cross-border mergers and acquisitions (M&A), the dominant form of FDI in the United States. Specifically, I assemble novel panel datasets of all American firms connected to an active Political Action Committee (PAC) or reported to lobby the U.S. government between 1997 and 2018 that experienced an M&A deal resulting in majority ownership change. With these data, I demonstrate that the survival rate of a connected PAC or continuation of lobbying post-M&A is significantly higher for firms with a new foreign (vs. American) owner. In addition, newly foreign-owned firms tend to maintain if not increase the intensity of their political activities post-M&A. I also observe a shift in lobbying focus to issue areas of interest to foreign MNCs. Collectively, these findings suggest that foreign MNCs are able to gain political access and influence in the U.S. by acquiring politically active American firms.

Author

• Jieun Lee, University at Buffalo, SUNY