Author: Li, Shuo
Title: CEO political ideology and credit risk assessment
Advisors: Cheng, C. S. Agnes (AF)
Degree: Ph.D.
Year: 2017
Subject: Hong Kong Polytechnic University -- Dissertations
Credit ratings
Chief executive officers
Business and politics
Department: School of Accounting and Finance
Pages: vii, 87 pages
Language: English
Abstract: In this study, I examine the role of CEO political ideology in the credit rating process. Credit rating agencies release their research methodologies for determining corporate credit ratings and identify managerial conservatism as one important factor that affects their risk assessments. The extant literature, however, has not investigated the relation between credit ratings and managerial conservatism, which, according to behavioral consistency theory, can be proxied by CEO political ideology. I hypothesize and find that firms run by Republican-leaning CEOs, who tend to have conservative political ideologies, enjoy more favorable credit ratings than firms run by Democratic-leaning CEOs. This finding holds after controlling for potential endogeneity and self-selection concerns, and is robust to a battery of sensitivity checks. In addition, I find that the association between CEO political ideology and credit ratings is more pronounced for firms with high uncertainty of information environment and for firms with weak corporate governance. I further mitigate the concern that economic bonding between CEOs and credit rating agencies may drive the results. Finally, I identify future earnings volatility and future return volatility as two possible channels through which CEO political ideology affects credit ratings, and show that CEO political ideology has a residual effect on credit ratings after controlling for these two channel variables.
Rights: All rights reserved
Access: open access

Files in This Item:
File Description SizeFormat 
991021952835503411.pdfFor All Users855.92 kBAdobe PDFView/Open

Copyright Undertaking

As a bona fide Library user, I declare that:

  1. I will abide by the rules and legal ordinances governing copyright regarding the use of the Database.
  2. I will use the Database for the purpose of my research or private study only and not for circulation or further reproduction or any other purpose.
  3. I agree to indemnify and hold the University harmless from and against any loss, damage, cost, liability or expenses arising from copyright infringement or unauthorized usage.

By downloading any item(s) listed above, you acknowledge that you have read and understood the copyright undertaking as stated above, and agree to be bound by all of its terms.

Show full item record

Please use this identifier to cite or link to this item: