Journal of Financial Stability Vol. 51 2020
Do political connections shield from negative shocks? Evidence from rating changes in advanced emerging economies
Abstract
In this study, we examine whether political connections affect market reactions to rating changes. Using a new and comprehensive dataset on ten advanced emerging markets, we find that political connections attenuate negative reactions linked to rating downgrades. This effect is shaped by political ties involving influential politicians and concerns all sample firms and a subsample of nonfinancial companies. Moreover, we establish that state-owned companies or companies with significant state ownership do not benefit from the mitigation effect of political connections.
- DOI
- 10.1016/j.jfs.2020.100786
- Volume
- 51
- Pages
- 100786
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref