US political corruption and firm financial policies

• 成果类型: Article
• 署名作者: Smith, Jared D.
• 署名单位: North Carolina State University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2015.08.021
• 发表日期: 2016
• 页码: 350-367
• 关键词: CASH HOLDINGS; leverage; financial policy; Local corruption; rent-seeking

摘要

Using US Department of Justice data on local political corruption, I find that firms in more corrupt areas hold less cash and have greater leverage than firms in less corrupt areas. The results are robust to including a range of controls and to using an instrumental variable approach, two alternative survey measures of corruption, and propensity score matching. Further, the association between corruption and leverage is largest among firms that operate primarily around their headquarters. Overall, the evidence is consistent with the hypothesis that firms manage liquidity downward and debt obligations upward to limit expropriation by corrupt local officials. (C) 2016 Elsevier B.V. All rights reserved.