Political Contributions and the Price of Credit Risk: Evidence from Credit Default Swaps

Shunlan Fang, Paul Hanouna, Alexei Ovtchinnikov and Saumya Prabhat
Additional contact information
Shunlan Fang: Kent State University
Paul Hanouna: Villanova University [USA]
Saumya Prabhat: Indian School of Business

Working Papers from HAL

Abstract: Firm political contributions are associated with lower credit default swap spreads for contributing firms. To address endogeneity, we employ novel instruments and use a set of exogenous events on campaign contribution restrictions: (a) the passage of the Bipartisan Campaign Reform Act (BCRA) that banned soft money contributions, (b) the Federal Election Commission decision to interpret the BCRA less strictly, (c) the partial reversal of the BCRA and, (d) the McConnell v. FEC Supreme Court decision, which upheld the BCRA. Overall, the evidence suggests that political contributions are valued by credit market participants.

Keywords: Political Contributions; Credit Risk; CDS; Moral Hazard; Financial Crisis (search for similar items in EconPapers)
Date: 2017-08-18
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Political Contributions and the Price of Credit Risk: Evidence from Credit Default Swaps (2017)
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:hal:wpaper:hal-01941524

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().