Election Uncertainty and Capital Structure

IF 0.6 Q3 Economics, Econometrics and Finance

Economics Bulletin Pub Date : 2020-01-01 DOI:10.2139/ssrn.2154653

Bahar Ulupinar, Isa Camyar

引用次数: 1

Abstract

Given different preference of political parties on macroeconomic issues, elections create a policy uncertainty. We hypothesize that election uncertainty increases cost of equity due to lower investor demand on equity issuances. Using U.S. elections from 1960 to 2010, we show that market leverage and probability to issue leverage are highest in the election year. On the other hand, when the election uncertainty resolves, firms experience a sharp decline in their leverage ratios. This finding suggests that firms rebalance and move their leverage ratios to target leverage. Our results are robust to definition of market and book leverage, S&P credit rating, marginal tax rates, and sub-period analysis

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选举不确定性与资本结构

鉴于各政党在宏观经济问题上的不同偏好，选举产生了政策的不确定性。我们假设，由于投资者对股票发行的需求降低，选举的不确定性增加了股票成本。利用1960年至2010年的美国大选，我们发现市场杠杆和发行杠杆的概率在选举年最高。另一方面，当选举的不确定性消除时，企业的杠杆率会急剧下降。这一发现表明，企业重新平衡并将其杠杆率移动到目标杠杆。我们的结果对市场和账面杠杆的定义、标准普尔信用评级、边际税率和分期分析都是稳健的

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

Economics Bulletin ECONOMICS-

CiteScore

1.60

自引率

0.00%

发文量

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