Partisan professionals: evidence from credit rating analysts

Authors Kempf, Tsoutsoura
Journal Journal of Finance
Year 2021
Type Published Paper
Abstract Partisan perception affects the actions of professionals in the financial sector. Linking credit rating analysts to party affiliations from voter records, we show that analysts not affiliated with the U.S. president's party downward-adjust corporate credit ratings more frequently. Since we compare analysts with different party affiliations covering the same firm in the same quarter, 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 that analysts' partisan perception has price effects and may influence firms' investment policies.
Keywords analysts, credit ratings, partisanship, polarization, belief disagreement, Trump, elections
URL https://doi.org/10.1111/jofi.13083
Tags Archival Empirical  |   Asset Pricing, Trading Volume and Market Efficiency  |   Experimental / Survey-Based Empirical