Bermpei, Theodora and Linares Zegarra, Jose (2024) Local Public Corruption and Corporate Debt Concentration: Evidence from US firms. The European Journal of Finance, 30 (15). pp. 1703-1727. DOI https://doi.org/10.1080/1351847X.2024.2333849
Bermpei, Theodora and Linares Zegarra, Jose (2024) Local Public Corruption and Corporate Debt Concentration: Evidence from US firms. The European Journal of Finance, 30 (15). pp. 1703-1727. DOI https://doi.org/10.1080/1351847X.2024.2333849
Bermpei, Theodora and Linares Zegarra, Jose (2024) Local Public Corruption and Corporate Debt Concentration: Evidence from US firms. The European Journal of Finance, 30 (15). pp. 1703-1727. DOI https://doi.org/10.1080/1351847X.2024.2333849
Abstract
Using debt structure data from a large sample of US non-financial companies during the period 2002-2016 combined with the US Department of Justice (DOJ) data on local public corruption, we examine the effect of public corruption on the degree of debt concentration in a firm’s debt structure. The results imply that firms in corrupt areas tend to use several debt types simultaneously, decreasing in that way debt concentration. These findings remain robust to tests that control for endogeneity. In further analysis, we show that these results are stronger for more informationally transparent firms, i.e., investment grade rated and publicly listed firms, that have easier access to capital debt markets. Lastly, in terms of debt choices, we find that firms in corrupt areas issue more commercial paper, senior bonds and capital leases, while they borrow less from banks. The study provides useful policy implications for combating corruption, as informationally opaque firms face increased barriers to debt financing.
Item Type: | Article |
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Uncontrolled Keywords: | Public corruption, Debt concentration, Information asymmetry, Financing policy |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 09 Apr 2024 16:12 |
Last Modified: | 30 Oct 2024 20:46 |
URI: | http://repository.essex.ac.uk/id/eprint/38054 |