Political Rights and the Cost of Debt
We examine the impact of political rights on bond ratings and spreads for a large sample of foreign corporate bonds issued by firms incorporated in 39 countries from 1980 to 2006. Similar to, but separate from, the relation for creditor rights, greater political rights are associated with higher ratings and lower yields. A one standard deviation increase in political rights is associated with an 18.6％ decline in bond spreads. We find evidence that political and legal institutions are substitutes; marginal improvements in political rights produce greater reductions in the cost of debt for firms from less developed legal systems. We examine potential factors through which political rights may affect the cost of debt and find that greater freedom of the press may provide an important channel for reducing bond risks, although corruption and expropriation risks also matter.
Yaxuan Qi Lukas Roth John K. Wald
Concordia University Pennsylvania State University University of Texas at San Antonio
国际会议
大连
英文
1-54
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）