The following dissertation contains two distinct empirical essays which contribute to the overall field of Financial Economics. Chapter 1 titles as “Corporate Lobbying, CEO Political Ideology and Firm Performance”. We investigate the influence of CEO political orientation on corporate lobbying efforts. Specifically, we study whether CEO political ideology, in terms of manager-level campaign donations, determines the choice and amount of firm lobbying involvement and the impact of lobbying on firm value. We find a generous engagement in lobbying efforts by firms with Republican leaning-managers, which lobby a larger number of bills and have higher lobbying expenditures. However, the cost of lobbying offsets the benefit for firms with Republican CEOs. We report higher agency costs of free cash flow, lower Tobin’s Q, and smaller increases in buy and hold abnormal returns following lobbying activities for firms with Republican managers, compared to Democratic and Apolitical rivals. Overall, our results suggest that the effects of lobbying on firm performance vary across firms with different managerial political orientations. Chapter 2 titled as “Corporate Lobbying and Labor Relations: Evidence from Employee” Litigations. We utilize employee litigations and other work-related complaints to examine if lobbying firms are favored in judicial process. We gather 27,794 employee lawsuits (after initial court hearing) between 2000 and 2014 and test the relationship between employee allegations and firms’ lobbying strategies. We find that employee litigations increase the number of labor-related bills in our sample. We document that the increase in employee lawsuits may drive firms into lobbying to change policy proposals. We also find robust evidence that the case outcome is different for lobbying firms compared to non-lobbying rivals, which may protect the shareholder wealth in the long run. Our results present that lobbying activities may make a significant difference in employee allegations. Our findings highlight the benefit of building political capital to obtain a biased outcome in favor of politically-connected firms.

Lobbying should be strictly regulated – that is the major finding of this thesis. The thesis presents many reasons to enact stricter regulations. The principle one being that, as lightly regulated as it is, lobbying is corroding democracy in both Canada and the United States. The thesis opens with a deep investigation of how lobbying works in both countries. There are examples taken from the literature, as well as original qualitative interviews of Canadian lobbyists, former politicians, and officials. Together, these make it clear that there is an intimate relationship between lobbying and campaign financing. The link between the two is sufficiently tight that lobbying and campaign financing should be considered mirrors of each other for the purposes of regulatory design and constitutional jurisprudence. They both have large impacts on government decision-making. Left lightly regulated, lobbying and campaign financing erode the processes of democracy, damage policy-making, and feed an inequality spiral into plutocracy. These have become major challenges of our time. The thesis examines the lobbying regulations currently in place. It finds the regulatory systems of both countries wanting. Since stricter regulation is required to protect democracy and equality, the thesis considers what constitutional constraints, if any, would stand in the way. This, primarily, is a study of how proposed stronger lobbying regulations would interact with the Canadian Charter of Rights and Freedoms, s. 2 (free expression and association rights) and s. 3 (democratic rights). The principal findings are that legislation which restricted lobbying as proposed would probably be upheld by the Canadian court, but struck down by the American court, due to differences in their constitutional jurisprudence. The thesis contends that robust lobbying regulations would align with Canadian Charter values, provide benefits to democracy, improve government decision-making, increase equality, and create more room for citizen voices. The thesis concludes with a set of proposed principles for lobbying reform and an evaluation of two specific reforms: limits on business lobbying and funding for citizen groups. Although the thesis focuses on Canadian and American lobbying regulations, its lessons are broadly applicable to any jurisdiction that is considering regulating lobbying.

This thesis is an examination of whether the “egalitarian model” for political finance that has been established by the Supreme Court of Canada, other Canadian courts and legal scholars and commentators is actually egalitarian and has been applied consistently (in Chapter 2), and whether Canada’s political finance system measures up to the Court’s model (in Chapters 3 and 4), and how it could be changed to comply with a more egalitarian model that would also be ethical in terms of preventing even the appearance of a conflict of interest (in Chapters 6 and 7). Chapter 1 sets out a general theoretical framework for evaluating the Supreme Court’s egalitarian model, and I develop and set out a more egalitarian model in Chapter 5. In the Chapter 8 conclusion, I summarize the findings and propose structural and positive Charter rights court cases as a way forward, given that the platforms federal politicians and political parties from the past few elections, and the reports of parliamentary committees, have not called for the most of the changes I propose are needed to make the system more egalitarian. The thesis addresses political finance broadly defined as money, property, use of property, gifts, services, favours and other benefits and advantages provided to nomination contestants, election candidates and political party leadership contestants, electoral district associations, political parties, politicians and their staff during election campaign periods and also during the time period between elections, including support provided by “third-party” interest groups, lobbyists and other individuals, and by media outlets. In Chapter 3, I examine the rules that apply to each of these political actors in the areas of registration, donations and loans, spending, public subsidies and disclosure (including auditing), including a separate section on the role of media and social media. Given that political systems include providers (whether as contractors or donors) of money, property and the use of property (including gifts and other benefits and advantages), and services (including favours) to politicians, and given that providers could be lobbyists, I also examine in Chapter 4 the rules concerning gifts, favours and other benefits and relations between voters, lobbyists and politicians, and concerning the conflicts of interest that can be caused by these activities. Other than disclosure and auditing, I do not cover enforcement measures or systems in any of the areas. However, I do note at various points in the thesis that, as several studies and history have shown clearly, effective enforcement measures, policies and practices are key to ensure compliance with such rules. The main contentions that I make are: that the key principles of the Supreme Court of Canada’s egalitarian model have not been consistently upheld by the Court and other Canadian courts, that Canada’ federal political finance system does not fulfill the Court’s egalitarian model, and that several changes are needed to make the model and the system more egalitarian, only a few of which have been addressed by Canadian courts and scholars to date. These contentions counter the claim made in the Court’s rulings, and by many scholars and commentators, that Canada’s political finance system has developed and is based on an egalitarian model. In Chapters 5 through 7, I develop a more egalitarian model and set out specific proposed changes to make Canada’s systems more egalitarian, both in theory and in practice, within the framework of a democratic good government political system (meaning a system with separation of powers, elections, human rights protections, rule of law etc.) and a mixed market economy with both public sector institutions and private sector businesses, unions and other organizations (cooperatives, non-profit, religious organizations etc.). Both the model and many of the specific proposed measures should also be applicable in other jurisdictions with different political systems and economic systems. The framework of 19 standards for a more egalitarian model that I develop in Chapter 5 is based mainly on John Rawls’ theory of justice, but modified and expanded to incorporate critiques of Rawls’ theory, other legal principles and democratic good government theories, international standards, government ethics case law, behavioural psychology studies, and evidence of the public’s expectations. The 201 proposals I make in Chapters 6 and 7 for specific changes to the rules of Canada’s current federal political finance system (again, broadly defined), are based on the model, measures from various jurisdictions in Canada and elsewhere, and international standards. I am not claiming that these changes would definitely result in “better” or more “public interest” policy-making decisions, however that would be determined. I am only contending that the framework I develop is more egalitarian than the Supreme Court’s model, and that the rule changes I suggest would make the political finance, gifts, favours, conflict of interest and lobbying systems align with the more egalitarian model I propose. I primarily use the doctrinal research methodology by examining scholarly research and, given I also examine aspects of the laws of Canadian provinces and municipalities, and other countries, I also deploy some aspects of the comparative methodology (most fully when comparing Canada’s federal rules to Quebec’s rules, and somewhat when comparing Canada’s rules to the U.S. and U.K. rules). The research results from these sources inform the conclusions I set out in my thesis. The thesis advances knowledge in the following areas: 1. It is the first complete evaluation of the federal Canadian political finance, gifts-favours-benefits, conflict of interest and lobbying rules and systems in their current state as of May 2023, based on the findings of extensive new research into key parts of these systems; 2. It sets out the first comprehensive analysis of how the Supreme Court of Canada’s egalitarian model has been applied by the Court and other courts inconsistently, in ways that do not comply with the model; 3. It sets out the first analysis of how Canada’s political finance statutory rules, again defined broadly to include rules that apply to donations, loans, gifts, services, favours and other benefits, lobbying and conflicts of interest, do not comply with the Supreme Court’s egalitarian model, based in part on new statistical research set out in 28 charts, and; 4. It sets out a new theoretical framework based on 19 standards, and a comprehensive set of 201 innovative proposals for changes to make Canada’s political finance rules (again defined broadly) more egalitarian, and more ethical in terms of preventing conflicts of interest. Five comprehensive studies of key parts of the political finance, ethics and lobbying systems are also proposed to gather key information needed to inform the design of some of the 201 proposed changes. Eight structural and positive Charter rights cases are also proposed to challenge current rules that do not comply with the egalitarian model.