عدم قطعیت سیاسی و انتخاب منابع بدهی
Abstract
1- Introduction
2- Literature review and hypotheses
3- Description of data
4- Empirical results
5- Conclusion
References
Abstract
This paper studies the effect of political uncertainty on the choice of debt sources. We find a positive relationship between political uncertainty stemming from elections and the proportion of bank loans over total debts, especially when elections are closely contested. Furthermore, this relationship is stronger in opaque firms and more financially constrained firms as well as firms from countries with weaker shareholder rights, labor protection, creditor rights and national governance.
Introduction
Political outcomes affect the regulatory policies that shape the external environment under which firms operate. As documented in a large strand of literature, political uncertainty, such as a change in government policy and national leadership, is one of the principal means by which politics affects corporate decisions. Prior research studied the effect of political uncertainty on investment (e.g., Durnev, 2014; Jens, 2017), dividend payouts (Huang et al., 2015), foreign direct investments (FDI – Nguyen et al., 2018), leverage ratio (Cao et al., 2013), corporate credit risk (Liu and Zhong, 2017; Kaviani et al., 2017), industry return volatility (Boutchkova et al., 2012), stock price and equity risk premia (Pastor and Veronesi, 2012, 2013), IPO activity (e.g., Colak et al., 2017), option pricing (Kelly et al., 2016), stock price crash risk (e.g., Li et al., 2018). However, to the best of our knowledge, no study has examined the relationship between political uncertainty and the choice of debt source yet. Examining debt choice rather than the amount of total debt is important because while the total amount of debt may not change over time, its composition (i.e., the allocation of debt between a bank and public debt) may change.