Prior literature examines motivations and impact of corporate lobbying and presents inconclusive evidence. We examine the association of corporate lobbying with firm performance by focusing on how this relationship varies with firm characteristics. Addressing various endogeneity concerns, our analysis shows that corporate lobbying has a negative association with firm performance. We find that the negative association between corporate lobbying and firm performance is largely driven by operationally complex firms. On the other hand, firms with high growth opportunities benefit more from lobbying than low-growth firms. Lobbying seems to provide limited tangible benefits in terms of helping a firm obtain government contracts or successfully pass the congressional bills lobbied. These results suggest that agency costs dominate the strategic benefits of lobbying activities. However, there is some evidence that firms benefit when there is political alignment between the firm and the party in power.