Corporate political transparency and the cost of debt

DeBoskey, David; Li, Yutao; Lobo, Gerald J.; Luo, Yan

doi:10.1007/s11156-020-00941-6

Cited by 16 publications

(24 citation statements)

References 72 publications

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“…Moving beyond financial information, DeBoskey et al (2017) found a negative relationship between corporate political disclosure and the cost of debt. They also found that this relationship is more pronounced for smaller companies, which have entrenched CEOs and who are more sensitive to government economic policy.…”

Section: Literature Reviewmentioning

confidence: 99%

Extending the benefits of ESG disclosure: The effect on the cost of debt financing

Raimo

Caragnano

Zito

et al. 2021

Corp Soc Responsibility Env

292

129

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In recent years, greater attention has been paid to sustainability issues. Companies have received increasing pressure from stakeholders to adopt sustainable behavior and provide an adequate representation of sustainability practices. Nonfinancial disclosure has thus taken on a crucial role. In the academic field, several researchers have analyzed the effects of nonfinancial disclosure. However, limited attention has been paid to the impact of nonfinancial information on the cost of debt. This study aims at bridging this gap by analyzing the effect of ESG disclosure on the cost of debt. The fixed effects analysis conducted on a sample of 8264 observations (an unbalanced panel data of 919 firms for the period 2010-2019), shows a negative effect of the ESG disclosure on the cost of debt financing. The results demonstrate that companies with greater levels of transparency in the dissemination of ESG information benefit from accessing third party financial resources at better conditions.

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Section: Literature Reviewmentioning

confidence: 99%

Extending the benefits of ESG disclosure: The effect on the cost of debt financing

Raimo

Caragnano

Zito

et al. 2021

Corp Soc Responsibility Env

292

129

View full text Add to dashboard Cite

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“…4.2.1. Dependent variable: political spending disclosure (PSD) Using the CPA-Zicklin Index (Baloria et al, 2019;Deboskey et al, 2018aDeboskey et al, , 2018bDeBoskey et al, 2020;Deboskey & Luo, 2018;Goh et al, 2020), PSD Index for each company in each year was calculated based on a total of 24 items, which we classified into three major dimensions: disclosure, policy and oversight. 6 The disclosure sub-index indicates whether firms disclose political contributions to government associations, trade associations, tax-exempt organisations, political parties, candidates or any other political organisation.…”

Section: Variables and Modelmentioning

confidence: 99%

“…Since owners' demand for more transparent PSD depends on the level of information asymmetry, it is expected that firm's overall financial reporting quality (as a proxy for information asymmetry) may influence the ownership structure-PSD relationship. DeBoskey et al (2020) argue that firms that exhibit higher PSD could have higher nonfinancial and financial reporting quality. Further, Chaney et al (2011) provide evidence that politically connected firms can afford the consequences of poor financial reporting quality because of political connections' protection.…”

Section: Introductionmentioning

confidence: 99%

“…Industry competitors may use firm's PSD to make inferences about firm's political connections and spending which can weaken firm's political position (Isidro & Marques, 2020). However, severe competition may motivate firms to exhibit more PSD to reduce information asymmetry and secure additional capital (DeBoskey et al, 2020;Goh et al, 2020). Motivated by such mixed views of industry competition, we provide evidence that institutional investors demand more PSD in the case of high industry competition (low industry concentration), suggesting that institutional owners prefer greater political transparency in investee firms operating in competitive industries to reduce information asymmetry and possibly secure external capital.…”

Section: Introductionmentioning

confidence: 99%

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Ownership structure and political spending disclosure

2021

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This study examines the link between ownership structure and political spending disclosure (PSD). We break down ownership into four different groups of shareholders: institutional, insider, governmental and foreign. Using a unique dataset provided by CPA-Zicklin for PSD and a panel dataset from S&P 500 companies between 2015 and 2018, our results reveal that institutional and governmental ownership are positively associated with the level of PSD, while insider ownership is negatively associated with the level of PSD. Additionally, while prior literature mainly investigated how ownership structure influences disclosure practices, we analyse the mechanisms through which ownership characteristics influence PSD. Our cross-sectional tests provide evidence that insider owners exhibit more PSD if they are pursing tax-related lobbying expenses and tax avoidance practices. Additionally, governmental owners demand lower PSD in firms with higher nonfinancial and financial reporting quality. Finally, institutional owners demand more PSD in the case of lower industry concentration. Overall, we conclude that different owners have distinct impacts and preferences on a firm's political strategy and various mechanisms uniquely operationalise the interactions between different owners and political transparency. Through agency theory, our results advance heated debates on PSDan emerging, yet hitherto less examined, category of voluntary disclosure.

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“…On the one hand, firms with higher leverage may have an incentive to lower disclosure transparency to avoid scrutiny by the provider of debt capital (Hyun et al, 2014). On the other hand, the provider of debt capital may demand more information to monitor management's behavior, which suggests that highly leveraged firms may be more forthcoming in their disclosure in order to facilitate the contracting demand for information and to lower the cost of debt (Leftwich et al, 1981;DeBoskey et al, 2017). Given the mixed evidence of the association between leverage and disclosure in prior studies, no directional prediction is made for this variable.…”

Section: Ara 264mentioning

confidence: 99%

Does board gender diversity affect the transparency of corporate political disclosure?

DeBoskey

Luo

Wang

2018

ARA

Self Cite

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Purpose The purpose of this paper is to examine the influence of board gender diversity on the transparency of corporate political disclosure (CPD). Design/methodology/approach Two empirical proxies, CPD transparency and policy transparency, are constructed from a data set jointly produced by the Center of Political Activity and the Carol and Lawrence Zicklin Center for Business Ethics Research. The CPD transparency score measures the level of transparency in voluntary corporate disclosure of the amount of political contributions and the identity of the recipients as well as the titles and names of the executives who authorize the political spending. The policy transparency score measures the level of transparency in the voluntary disclosure of the policies governing corporate political spending. Board gender diversity is measured by the percentage of women on the board of directors. Findings Higher proportions of female directors are associated with more transparent disclosure of political contributions after controlling for a set of corporate governance and firm-level variables. Originality/value This study is the first to examine whether and how gender-diversified boards enhance the transparency of CPD. It contributes to the literature by providing evidence that gender-diversified boards enhance corporate governance.

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Corporate political transparency and the cost of debt

Cited by 16 publications

References 72 publications

Extending the benefits of ESG disclosure: The effect on the cost of debt financing

Extending the benefits of ESG disclosure: The effect on the cost of debt financing

Ownership structure and political spending disclosure

Does board gender diversity affect the transparency of corporate political disclosure?

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