Partisan Professionals: Evidence from Credit Rating Analysts

Elisabeth Kempf and Margarita Tsoutsoura

No 25292, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Partisan perception affects the actions of professionals in the financial sector. Using a novel dataset linking credit rating analysts to party affiliations from voter records, we show that analysts who are not affiliated with the U.S. president's party downward-adjust corporate credit ratings more frequently. By comparing analysts with different party affiliations covering the same firm in the same quarter, we ensure that differences in firm fundamentals cannot explain the results. We also find a sharp divergence in the rating actions of Democratic and Republican analysts around the 2016 presidential election. Our results show analysts' partisan perception has sizable price effects on rated firms and may influence firms' investment policies.

JEL-codes: G14 G24 G41 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-cfn and nep-pol
Note: CF POL
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Citations: View citations in EconPapers (13)

Published as ELISABETH KEMPF & MARGARITA TSOUTSOURA, 2021. "Partisan Professionals: Evidence from Credit Rating Analysts," The Journal of Finance, vol 76(6), pages 2805-2856.

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Related works:
Journal Article: Partisan Professionals: Evidence from Credit Rating Analysts (2021)
Working Paper: Partisan Professionals: Evidence from Credit Rating Analysts (2018)
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