The impact of environmental accountability on firm corporate lobbying behaviour: an empirical investigation of US listed firms

This thesis aims to investigate an understanding into the behaviour of firms in relation to the environment contextualized within the political arena of the US. By employing a quantitative research approach, the thesis consists of three empirical studies (covering firm level data between 2010 to 2020) based on four theoretical underpinnings, namely; public choice, tollbooth, legitimacy and stewardship.

The first study sampled US firms and looked at their corporate lobbying spending. After running both the fixed effect and random effect models along with the Hausman test to determine which model was best applicable to the hypothesis, the random effect model illustrated optimal results concluding that firms that lobby more tend to be poor environmental performers and their corporate lobbying habit creates a protection against environmental non-conformity. The study also found that leadership experience helped firms to lobby as experience brings knowledge of knowing the tricks of the trade.

The second study analysed the behaviour of high lobbying US firms and the level of commitment they have towards the environment. As high corporate lobbying equated to poor environmental performance, this study conducted a pooled OLS regression model and found that high lobbying firms have greater commitment to the environment as now need to get back-up on their feet after suffering from being poor performers; demonstrating commitment towards improving their relationship to the environment. It was concluded that corporate lobbying acts as a tool to buy time in order for improvements to be made.

Building upon that, the third study sampled US firms to analyse the genuineness of those firms depicting environmental commitment. After running a pooled OLS regression model, it was concluded that those firms that depict commitment to the environment are more environmentally friendly and are genuinely looking to improve their impact and relationship with the environment sincerely through their actions rather than just simply announcing and reporting empty words.

This thesis makes an overall contribution to the field of accounting by analysing the various factors of environmental accountability collectively; environmental performance, environmental commitment and environmental friendliness along with establishing its connection to politics. Furthermore, contribution is also made by the fact that this thesis investigates the inclusive behaviour and nature of firms towards jurisdictions when environmental accountability is at stake.