Publication Type

Journal Article

Version

submittedVersion

Publication Date

1-2026

Abstract

When subject to public scrutiny, do firms strategically use advertising to reduce expected political costs? Advertising can ease public concerns, thereby reducing the pressure on politicians to act harshly against scrutinized firms and their industries. We use repeated congressional testimony by industry members as a novel way to identify political scrutiny. Our central finding is that scrutinized industries increase their advertising spending 132 percent more in the electorates of politicians overseeing the hearings than in the electorates of other politicians. Further, strategic advertising is complementary to income-decreasing accounting choices and a substitute for lobbying. Overall, our study sheds light on a previously undocumented mechanism through which firms attempt to manage expected political costs.

Keywords

Congress, Political cost hypothesis, Image building

Discipline

Accounting

Research Areas

Corporate Reporting and Disclosure

Areas of Excellence

Digital transformation

Publication

Journal of Accounting and Economics

First Page

1

Last Page

23

ISSN

0165-4101

Identifier

10.1016/j.jacceco.2026.101860

Publisher

Elsevier

Additional URL

https://doi.org/10.1016/j.jacceco.2026.101860

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