Political Uncertainty and Private Debt Contracting: Evidence from the U.S. Gubernatorial Elections

2019 ◽  
Author(s):  
Kirak Kim ◽  
Trang Nguyen
Keyword(s):  
Political Uncertainty ◽  
Private Debt ◽  
Gubernatorial Elections ◽  
Debt Contracting ◽  
The U.S

scholarly journals Political Uncertainty and IPO Activity: Evidence from U.S. Gubernatorial Elections

2017 ◽  
Vol 52 (6) ◽  
pp. 2523-2564 ◽  
Author(s):  
Gönül Çolak ◽  
Art Durnev ◽  
Yiming Qian
Keyword(s):  
United States ◽  
Initial Public Offering ◽  
The United States ◽  
Control Group ◽  
Government Contracts ◽  
Political Uncertainty ◽  
Gubernatorial Elections ◽  
Public Offering

We analyze initial public offering (IPO) activity under political uncertainty surrounding gubernatorial elections in the United States. There are fewer IPOs originating from a state when it is scheduled to have an election. To establish identification, we develop a neighboring-states method that uses bordering states without elections as a control group. The dampening effect of elections on IPO activity is stronger for firms with more concentrated businesses in their home states, firms that are more dependent on government contracts (particularly state contracts), and harder-to-value firms. This dampening effect is related to lower IPO offer prices (hence, higher costs of capital) during election years.

Global Political Uncertainty and Asset Prices

2019 ◽  
Vol 33 (4) ◽  
pp. 1737-1780 ◽  
Author(s):  
Jonathan Brogaard ◽  
Lili Dai ◽  
Phong T H Ngo ◽  
Bohui Zhang
Keyword(s):  
Equity Market ◽  
Equity Returns ◽  
Political Uncertainty ◽  
Election Cycle ◽  
Equity Prices ◽  
Sovereign Bond ◽  
Oxford University ◽  
Bond Returns ◽  
Published Paper ◽  
The U.S

Abstract We show that global political uncertainty, measured by the U.S. election cycle, on average, leads to a fall in equity returns in fifty non-U.S. countries. At the same time, market volatilities rise, local currencies depreciate, and sovereign bond returns increase. The effect of global political uncertainty on equity prices increases with the level of uncertainty in U.S. election outcomes and a country’s equity market exposure to foreign investors, but does not vary with the country’s international trade exposure. These findings suggest that global political uncertainty increases investors’ aggregate risk aversion, leading to a flight to safety.(JEL F30, F36, G12, G15, G18) Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Private lenders' use of analyst earnings forecasts when establishing debt covenant thresholds

2021 ◽  
Author(s):  
Andrew C. Call ◽  
John Donovan ◽  
Jared Jennings
Keyword(s):  
Fixed Effects ◽  
Earnings Forecasts ◽  
Analyst Forecasts ◽  
Debt Contracts ◽  
Private Debt ◽  
Debt Contracting ◽  
Variable Approach ◽  
Debt Covenant ◽  
Analyst Earnings ◽  
Instrumental Variable Approach

We examine whether lenders use analyst forecasts of the borrower's earnings as inputs when establishing covenant thresholds in private debt contracts. We find that, among debt contracts that include an earnings covenant, earnings thresholds are set closer to analyst forecasts when analysts have historically issued more accurate earnings forecasts. These results are robust to firm fixed effects and an instrumental variable approach. Further, we find that, following a plausibly exogenous decline in the availability of analyst earnings forecasts, debt contracts are less likely to include earnings covenants. Our evidence is consistent with lenders using analyst earnings forecasts as an input when establishing debt covenant thresholds and suggests sell-side analysts play a role in debt contracting.

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