Partisan conflict and corporate credit spreads: The role of political connection

Research output: Contribution to journalJournal articlepeer-review


This paper documents the positive impact of partisan conflict on corporate credit spreads for politically connected companies and industries. The effect is both economically meaningful and statistically significant, stands under an extensive set of control variables, and is stronger for speculative-grade bonds. Several approaches are adopted to resolve endogeneity issues and further establish causality. Partisan conflict affects corporate credit spreads through a discount rate channel, increases investors’ risk aversion, and leads to higher borrowing costs and widening credit spreads. Affected companies respond by reducing debt issuance and postponing investments until the conflict subsides.
Original languageEnglish
Article number102526
Number of pages19
JournalJournal of Corporate Finance
Early online date19 Dec 2023
Publication statusPublished - Feb 2024

Scopus Subject Areas

  • Economics and Econometrics
  • Business and International Management
  • Finance
  • Strategy and Management

User-Defined Keywords

  • Corporate credit spreads
  • Partisan conflict
  • Political connection


Dive into the research topics of 'Partisan conflict and corporate credit spreads: The role of political connection'. Together they form a unique fingerprint.

Cite this