Firm-level political risk and external financing choices

Soomi Jang, Heeick Choi and Kim, Hyung Tae (Ted)

Finance Research Letters, 2023, vol. 58, issue PA

Abstract: This study investigates the association between firm-level political risk and external financing choices. We find that firm-level political risk is positively related to net equity issuance but is insignificantly associated with net debt issuance. The evidence shows that precautionary savings, market timing, and internal financial constraints could explain the positive relation between firm-level political risk and net equity issuance. Overall, our findings suggest that firms exposed to higher political risk issue more equity than debt as a source of external financing.

Keywords: Firm-level political risk; External financing; Precautionary savings; Market timing; Internal financial constraints (search for similar items in EconPapers)
JEL-codes: D81 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323007092

DOI: 10.1016/j.frl.2023.104337

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