Firm-level political risk and equity issuance

IF 5.4 2区经济学 Q1 BUSINESS, FINANCE

Journal of International Financial Markets Institutions & Money Pub Date : 2024-01-16 DOI:10.1016/j.intfin.2024.101944

Dewan Rahman , Anamul Haque , Muhammad Kabir , Shehub Bin Hasan

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Abstract

We examine whether firm-level political risk influences the issuance of equity (debt) to finance corporate investment. With a sample of 64,693 firm-quarter observations from 2002 to 2020, we find that firm-level political risk is significantly and positively associated with subsequent equity issuance as opposed to debt issuance. To mitigate endogeneity, we estimate firm fixed-effects regression, perform nearest-neighbor score matching technique and Heckman’s (1979) two-step correction procedure, and employ gubernatorial elections in different states of the U.S. as a shock to the firm-level political risk. We also test for two potential economic mechanisms, financial flexibility and information asymmetry, and find that our baseline results are more pronounced for these channels. Our study presents new evidence on firms’ financing choices in the presence of firm-level political risk.

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公司层面的政治风险与股票发行

我们研究了公司层面的政治风险是否会影响为企业投资融资而发行股票（债务）。在 2002-2020 年间 64,693 个公司季度观察样本中，我们发现公司层面的政治风险与随后的股票发行显著正相关，而与之相对的是债务发行。为了减少内生性，我们估计了公司固定效应回归，采用了近邻得分匹配技术和 Heckman（1979）的两步校正程序，并将美国不同州的州长选举作为公司层面政治风险的冲击因素。我们还对财务灵活性和信息不对称这两种潜在的经济机制进行了检验，发现这些渠道的基线结果更为明显。我们的研究为企业在面临企业层面政治风险时的融资选择提供了新的证据。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of International Financial Markets Institutions & Money Multiple-

CiteScore

6.60

自引率

10.00%

发文量

142

期刊介绍： International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.