Agency issues with small lobby firms: A test of competing hypotheses

Abstract

Several scholars have suggested that agency problems might significantly influence how well lobby agents represent the interest of their lobby principals (Stephenson and Jackson in Harv J Legis 47(1):1-20, 2010; Kersh in Crit Rev 14:237-258, 2000; Lowery and Marchetti in Interest Groups Advocacy 1(2):139-170, 2012). Schiff et al.'s (Interest Group Advocacy 4(3):225-248, 2015) analysis of lobby spending by major clients of the top 19 lobby firms in Washington in 2012 found strong support for these expectations. We address the generalizability of their finding by using the same explanatory model employed by Schiff et al. (Interest Group Advocacy 4(3):225-248, 2015), extending their analysis to the same principals' spending with smaller lobby firms. After outlining competing expectations about the severity of agency problems with smaller lobby firms, we assess their veracity with 2012 data. In the conclusion, we discuss the implications of our findings for the generalizability of agency problems in lobbying relationships between principals and agents.