**3. Why we should think of corporate lobbying to enhance both financial and social performance?**

While in the previous section, we interrogate the effect of corporate environmental responsibility (CER) as a strategic policy used by companies in the events of environmental misconduct, it is also necessary to analyze the impact of corporate lobbying, as a technique introduced by firms' to affect their value. While lobbying was more a matter of a few individuals attempting to influence others through various means, the activity has today found various ways to grow and evolve in a legal way.

Lobbying refers to the political activities that special interests, including corporations, are engaged in to influence legislators at different levels of the government. It has a long history in the United States and is protected by the Constitution as a basic right of "freedom of speech."

At the federal level, lobbying is defined as "any communication made on behalf of a client to members of Congress, congressional staffers, the President, White House staff and high-level employees of nearly 200 agencies, regarding the formulation, modification, or adoption of legislation" (The Center for Public Integrity). It is regulated by the Lobbying Disclosure Act of 1995.

Recently, researchers start to investigate the relationship between corporate lobbying expenditures and shareholder value. While some studies conclude that lobbying activities generally increase the firm value [68–70], other studies provide evidence that lobbying activities are associated with decreases in firm value [71, 72] or are not associated with firm value [73].

A study conducted by Aggarwal, Meschke, and Wang [74] and Skaife [75] suggested that firms could incur lobbying expenditures as a strategic investment intended to generate future benefits for firms and their shareholders. Alternatively, lobbying expenditures could be symptomatic of agency problems, whereby managers personally benefit from the political power and influence associated with lobbying activities, at the expense of shareholders.

Lobbying represents an alternative strategy that "aims to change policy recommendations to benefit the company and/or industry" [19]. Prior research found that lobbying can build political capital and enhance company's value [76] by increasing firm's reputation [19, 70].

Based on previous studies, political lobbying is associated with better access to finance, and/or lower taxation, government bailouts, higher market returns, more government contracts, greater market share [77], lower takeover risk, and preferential awards of government contracts and investments [4].

It is found that political power and connections significantly affect firm value [78–80]. According to the latest work by Vidal, Draca, and Fons Rosen [81], firms' are prepared to pay higher fees for lobbying activities for people with power like politicians believing that these connections can enhance a firm's value.

One of the most controversial and debated issues in the main time is the environmental protection. Over the past few decades, huge numbers of scientific research have evaluated the earth's condition, and consumers are becoming more conscious of the environmental harm caused by polluting firms, which may lead to a decrease in incomes due to consumers' boycotts and government penalties, and consequently a decline in shareholder wealth.

As an example, firms that are involved in lawsuits, controversies, or scandals such as Enron, WorldCom, Phillip Morris, and Halliburton, spent heavily on lobbying. Previous research found that lobbying decreases the risk of companies suffering from fraudulent compliance actions [82, 83] and labor lawsuits [19]. Lobbying allows companies to use its power to "capture" value in the political field to defend acquired positions and/or to create new market opportunities and decrease monetary penalties [82, 83].
