Political ties and raising capital in global markets: Evidence from Yankee bonds

Ambrocio, Gene; Gu, Xian; Hasan, Iftekhar

Abstract

This paper examines whether state-to-state political ties help firms obtain better terms when raising funds in global capital markets. Focusing on the Yankee bonds market, we find that issuances by firms from countries with close political ties with the US feature lower yield spreads, higher issuance amounts, and longer maturities. Such an association is more pronounced for firms located in low income and highly indebted countries as well as firms in government-related industries, first-time issuers, and relatively smaller firms. Our study provides evidence supporting the notion that country-level political relationship is an important factor when raising capital in international markets.

• Journal Article Type: Article
• Acceptance Date: May 17, 2022
• Online Publication Date: May 25, 2022
• Publication Date: 2022-06
• Deposit Date: Oct 10, 2022
• Publicly Available Date: Nov 26, 2023
• Journal: Journal of Corporate Finance
• Print ISSN: 0929-1199
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 74
• Article Number: 102223
• DOI: https://doi.org/10.1016/j.jcorpfin.2022.102223
• Public URL: https://durham-repository.worktribe.com/output/1189939