The study examines how CEO activism influences policymakers' receptiveness to a firm's lobbying efforts. While there is abundant research on the consequences of CEO activism, few insights exist on how policymakers might respond to it. Studying a set of U.S. based firms over 2014-2019, we find that Republican policymakers may react negatively to CEO activism that is liberal-leaning. Specifically, the effectiveness of tax lobbying directed at Republican policymakers is lower for firms with CEOs engaged in liberal-leaning activism, compared to firms with no-activist CEOs. We measure tax lobbying effectiveness through a Difference-in-Differences (DD) analysis of a subsample of firms that experienced an exogenous change in tax-lobbying intensity due to the Tax Cuts and Jobs Act (TCJA). We then show that this effectiveness is lower for firms with activist CEOs compared to firms without, controlling for all other factors, using a Difference-in-Differences-in-Differences (DDD) analysis. Drawing on affective polarization literature, our findings challenge current assumptions in the corporate political activity (CPA) literature, showing that policymakers' receptiveness to CPA can vary due to negative sentiment by policymakers toward firms with activist CEOs.
