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Prof. Bret Johnson
Associate Professor in Accounting
Costello College of Business
George Mason University

This study examines the determinants and regulatory consequences of firms’ direct lobbying to the U.S. Securities and Exchange Commission (SEC), an important yet understudied form of corporate political engagement. While prior literature has largely focused on general lobbying to Congress on lawmaking or on formal participation through public comment letters on SEC rulemaking, we document that firms also engage in targeted lobbying directly to the SEC outside these formal channels. Using Lobbying Disclosure Act filings, we find that firms under SEC investigation are more likely to lobby the SEC, consistent with a strategic motive to manage regulatory scrutiny. Direct SEC lobbying is associated with a lower likelihood of investigation initiation, and conditional on an investigation, with a reduced probability and severity of Accounting and Auditing Enforcement Releases (AAERs), particularly in accounting-related cases. In contrast, direct SEC lobbying is associated with increased monitoring through the comment letter process. These findings suggest a regulatory tradeoff in which heightened ex ante monitoring substitutes for more severe ex post enforcement actions. Overall, the evidence highlights direct SEC lobbying as an influential channel of corporate political engagement that shapes how regulatory attention is allocated between monitoring and enforcement.