POLITICAL COSTS AND LOBBYING ACTIVITY OF AUSTRALIAN GOLD MINING FIRMS

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Abstract

This paper provides empirical evidence on the lobbying behaviour induced by political costs in the Australian gold mining industry. The Australian gold mining industry remained tax-exempt for nearly seven decades until 1 January 1991. Due to its rapid prosperity in the early 1980s, the industry came under intense political scrutiny in the mid- to late-1980s. In particular, in December 1985 a federal tax inquiry was commissioned which investigated the economic and social impact of removing the tax-exempt status of the industry. Using the voluntary submissions to the federal tax inquiry as a measure of lobbying activity, this study documents that gold mining firms’ lobbying positions were positively related to the quantity of recoverable gold reserves held by them and profitability of their operations. Results of this paper confirm findings in prior research that firm lobbying positions are consistent with the adverse economic consequences of regulatory changes.

Keywords: Political Costs, Corporate Lobbying, Gold Reserves, Profitability, Gold Mining, Tax Inquiry, Australia, Gold Exploration, Gold Tax

How to cite this paper: Monem, R. M. (2006). Political costs and lobbying activity of Australian gold mining firms. Corporate Ownership & Control, 3(2), 35-44. https://doi.org/10.22495/cocv3i2p5