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Credit ratings and top executives’ political ideology

Author

Listed:
  • Alshamrani, Abdulaziz A.
  • Rakowski, David
  • Sarkar, Salil

Abstract

We examine whether credit ratings reflect the political ideology of the broader top management team rather than that of the CEO alone. Using political donation data for top executives from 1992 to 2017, we show that firms with more conservative executive teams receive higher credit ratings and are more likely to be investment grade. While CEO conservatism is positively associated with ratings, the ideology of non-CEO executives has comparable and often greater explanatory power. In firms where CEO and executive team ideologies diverge, ratings align more closely with the ideology of non-CEO managers. Additional analyses exploiting CEO turnover, firm fixed effects, and matched samples largely rule out alternative explanations based on firm culture or selection. Overall, the results suggest that credit rating agencies condition on the risk preferences of senior leadership teams rather than solely on CEOs.

Suggested Citation

  • Alshamrani, Abdulaziz A. & Rakowski, David & Sarkar, Salil, 2026. "Credit ratings and top executives’ political ideology," The North American Journal of Economics and Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:ecofin:v:82:y:2026:i:c:s106294082500213x
    DOI: 10.1016/j.najef.2025.102573
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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