Corporate Political Activity and Corporate Investment: Quantile Evidence on Governance and Ethical Leadership Effects

Corporate political activity (CPA), lobbying and political contributions intended to influence the policy environment may either complement or crowd out real investment. This study examines when CPA is investment-enhancing by combining firm- and year-fixed effects, Dynamic System-GMM for mean-level endogeneity, and fixed-effects quantile and IV-quantile regressions to recover distribution-varying effects with endogenous CPA. Using firm-year data for Fortune World’s Most Admired Companies (2016–2022), results show that CPA is associated with higher investment at lower quantiles, consistent with uncertainty-buffering and financing-access channels, but attenuates and can turn negative at upper quantiles, consistent with diversion at high CPA intensity; the overall pattern is inverted-V. Two firm-level boundary conditions are introduced: Corporate Governance and Ethical Leadership. Both moderators amplify the positive CPA–Investment association in the lower tail and temper adverse upper-tail effects. Findings are robust to alternative investment proxies (CAPEX/Assets, asset growth, R&D intensity), CPA scaling, timing placebos, balanced subsamples, and instrument choices.