The Effect of Management Lobbying on the Relation between Investor Sentiment and Product Market Competition with Firm's Performance Quality

This research examines the effect of management lobbying on the relation between investor sentiment and product market competition with the firm's performance quality (PQ).

To measure firm's PQ, used a measure of nine criteria includes four of which were related to profitability, three to financial status, and two to operational efficiency, and to measure the investor sentiment used the index of the cumulative return movement, the competition of the product market used the Lerner index, and management lobbying has used the criteria of board members affiliated with the government, parliament and governmental shareholders with more than ten percent. 167 companies were selected by systematic screening from the companies listed on the TSE during 2011 to 2021. Logistic regression model and likelihood ratio test were used to check the significance of the whole model.

Investor sentiment has a significantly positive effect on the firm's PQ, management lobbying has a significantly negative effect on the firm's PQ, management lobbying has a negative and significant effect on the relation between investor sentiment and PQ. Product market competition has a significantly positive effect on the firm's PQ, and management lobbying has a significantly negative effect on the relation between product market competition and PQ.

The investor sentiment improves PQ, but management lobbying weakens PQ, and also it weakens the effect of investor sentiment on PQ. Product market competition will improve PQ and management lobbying will weaken the relations between product market competition and PQ.

Contribution:

 In the current literature, management lobbying plays an important role in managing and directing the firm's PQ, as well as product market competition, investors show reactions by judging and observing such behaviors of company officials.