Political connections and debt restructurings

Joseph T. Halford and Chengcheng Li

Journal of Corporate Finance, 2020, vol. 65, issue C

Abstract: This paper presents evidence that distressed firms with politically connected executives and board members are more likely to reorganize outside of court than to file for Chapter 11 bankruptcy. This relation is more evident for firms that have more political importance, such as major employers within a state, firms located in swing states, and in periods leading up to major election dates. The evidence suggests that the expected costs of financial distress are lower for politically connected firms which may partially explain the higher leverage ratios of politically connected firms documented in the extant literature.

Keywords: Political connections; Corporate distress; Debt restructuring (search for similar items in EconPapers)
JEL-codes: G30 G33 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119918306096
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:65:y:2020:i:c:s0929119918306096

DOI: 10.1016/j.jcorpfin.2019.101497

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().