Theoretical Light in Empirical Darkness: Illuminating Concealment of Corporate Political Activity

Abstract: Law-abiding firms often attempt to conceal their corporate political activity (CPA) in whole or in part, yet the increased concealment of CPA has not been matched by our understanding of the phenomenon. We develop a theoretical framework to analyze the drivers of a firm’s decision to “go dark,” The overarching logic is anchored in the demand-side for nonmarket action and argues that firms will be more likely to conceal their CPA when it increases their expected return from engaging in CPA on an issue. We develop a baseline model of a firm’s decision regarding its CPA modality (i.e., its degree of concealment) on an issue while holding its CPA volume constant, and based upon this model’s parameters, we then develop propositions regarding changes in the level of a firm’s CPA concealment. We argue that theory is particularly important for investigating consequential phenomena that yield scarce data – it is theory which guides data discovery ex ante, helps assess bias ex post, and uncovers key insights that empirical analysis alone cannot generate.