Pecuniary Largess as a Variable in Corporate Political Activities

D R A F T

We developed a new variable called Largess which attempts to provide a financial input to political activity (PA), but which turns out to also be a candidate for a response. Schuler (1999) modifies the Martin direct-effects PA model by suggesting a mediating-effects approach, which seems to better posit a causal explanation between the economic environment, organizational composition, and the corporate PA. Largess could be an antecedent or a consequence between PA and the economic and organizational components. In contrast to 2002 Revenue, which was excluded for all response, the Largess has been included in the prediction model for the Size of Senate Network. Its effect on the response and position in the factor model is being determined at this time.

Pecuniary largess was an attempt to provide better insight into the dollars given by those companies which gave. A scaling would have to be performed, based on sales or net income. Generally giving would increase as the former variables increased; the idea was to come up with an excess increase/decrease to use a predictor in the desired response variables. Based on amount of missing or incomplete financial and PC data, we couldn't use excess increase/decrease, but we could make a Total of all Federal soft/hard and Other total for 2002 (ALLGIVE02) and compare with Net Income for 2002. This variable is LARGESS02.

Largess is measured in percent of Net Income since contributions are not tax deductible. The units are "colloquial" percent, just to keep the smaller numbers from cluttering the analysis, .e.g., .003 == "0.3%" Some of the companies with greater Largess give 1-3% of net income. Company #62, Northrop Grumman Corporation, in fact gave almost 21% for 2002, on NI of $64M, a bad year for NOC.

If NI is <0, then we set the %PC as 999. (It should be infinity). This is AllGive02= FedTTLbux02 + SFTTTL02 + bux_TTL02. E.g., #45, International Paper, had -880M NI in 2002, but gave a total of 785,962 in Federal and other areas. One could say IP has INFINITE Largess, but in fact there is an "expected" or :ante" amount which must be maintained, or is perceived to need to be maintained, in good times or bad.

We have 19 companies which gave ZERO in 2002, but which averaged about $800k NI for 2002.

We have 23 companies with Infinite Largess; They gave around $3/4M apiece even though their overall net income was negative by this same amount! Maximum PC by these was > $10M.

If any our 3 PC categories are missing data, then we set to zero since we are interested in total numbers. Let missing Income02 be the missing factor.

We have 58 companies with missing NI figures for 2002 and 2003. but which gave a median $13,523, with a $1,4M being the top 90th percentile of this group.

Remember, this is WIP.

John A. Dobelman, Ph.D.