Does Economic Policy Uncertainty Drive the Initiation of Corporate Lobbying?

Economic policy uncertainty (EPU) raises firms' incentive to lobby policymakers to access policy information and influence policy outcomes. Surprisingly, we find that non-lobbying firms are less likely to initiate lobbying during heightened EPU periods. The evidence is consistent with our time-varying barriers hypothesis that lobbying entry barriers increase with EPU. We verify that the negative effect of EPU on lobbying initiation arises through the channels of lobbying entry expenses and returns to experience. Furthermore, lobbying entry expenses are not large, implying that returns to experience is likely a more serious barrier that prevents non-lobbying firms from initiating lobbying, especially during heightened EPU periods