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Political connections and seasoned equity offerings

journal contribution
posted on 16.09.2021, 09:34 by Modestus Nnadi, Ghulam Sorwar, Rasol Eskandari, Amon ChizemaAmon Chizema
This study examines the impact of political connections on seasoned equity offerings. Using seasoned equity offerings (SEOs) from 2001 to 2018 in the USA, we find that politically connected issuers enjoy a lower cost of seasoned equity issuance than their non-connected 2 counterparts. Our empirical evidence is robust to controls for firm characteristics, corporate governance features, propensity score matching models, and an instrumental variable approach. Moreover, connected issuers conducting primary offerings and those operating in high corrupt states benefitted more from their political connections. Overall, our evidence is consistent with the view that political connections reduce the cost of raising external capital.

History

School

  • Business and Economics

Department

  • Business

Published in

Journal of Banking and Finance

Volume

133

Publisher

Elsevier

Version

AM (Accepted Manuscript)

Rights holder

© Crown. Published by Elsevier

Publisher statement

This paper was accepted for publication in the journal Journal of Banking and Finance and the definitive published version is available at https://doi.org/10.1016/j.jbankfin.2021.106312

Acceptance date

02/09/2021

Publication date

2021-09-05

Copyright date

2021

ISSN

0378-4266

Language

en

Depositor

Prof Amon Chizema. Deposit date: 14 September 2021

Article number

106312