Partisan Professionals: Evidence from Credit Rating Analysts / Elisabeth Kempf, Margarita Tsoutsoura.

Format:

Book

Author/Creator:

Kempf, Elisabeth.

Contributor:

National Bureau of Economic Research.

Tsoutsoura, Margarita.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25292.

NBER working paper series no. w25292

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Partisan Professionals

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

Partisan perception affects the actions of professionals in the financial sector. Using a novel dataset linking credit rating analysts to party affiliations from voter records, we show that analysts who are not affiliated with the U.S. president's party downward-adjust corporate credit ratings more frequently. By comparing analysts with different party affiliations covering the same firm in the same quarter, we ensure that differences in firm fundamentals cannot explain the results. We also find a sharp divergence in the rating actions of Democratic and Republican analysts around the 2016 presidential election. Our results show analysts' partisan perception has sizable price effects on rated firms and may influence firms' investment policies.

Notes:

Print version record

November 2018.