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Corporate political transparency and the cost of debt

Author

Listed:
  • D. G. DeBoskey

    (San Diego State University)

  • Yutao Li

    (University of Lethbridge)

  • Gerald J. Lobo

    (University of Houston)

  • Yan Luo

    (San Diego State University)

Abstract

We examine the relation between borrowing firms’ corporate political transparency and the cost of debt. Using a sample of S&P 500 firms over the 2012–2016 period, we document a significant negative association between firms’ corporate political transparency and their cost of debt. We also find that the negative association is more pronounced when the borrowing firms are in less unionized industries and have younger executives (CEOs or board of directors). Our results are robust to a variety of sensitivity tests.

Suggested Citation

  • D. G. DeBoskey & Yutao Li & Gerald J. Lobo & Yan Luo, 2021. "Corporate political transparency and the cost of debt," Review of Quantitative Finance and Accounting, Springer, vol. 57(1), pages 111-145, July.
    • Handle: RePEc:kap:rqfnac:v:57:y:2021:i:1:d:10.1007_s11156-020-00941-6
    DOI: 10.1007/s11156-020-00941-6
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    More about this item

    Keywords

    Corporate political activities; Corporate political transparency; Cost of debt; Risk taking; Conflict of interest between shareholders and creditors; Syndicated loan market;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

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