Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • December 2021
  • Article
  • Journal of Finance

Partisan Professionals: Evidence from Credit Rating Analysts

By: Elisabeth Kempf and Margarita Tsoutsoura
  • Format:Print
ShareBar

Abstract

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 affects firms’ cost of capital and investment policies.

Keywords

Political Affiliation; Credit Rating Agencies; Political Partisanship; Political Elections; Perception; Credit

Citation

Kempf, Elisabeth, and Margarita Tsoutsoura. "Partisan Professionals: Evidence from Credit Rating Analysts." Journal of Finance 76, no. 6 (December 2021): 2805–2856.

Supplemental Information

Internet Appendix
  • Find it at Harvard
  • Read Now

About The Author

Elisabeth Kempf

Finance
→More Publications

More from the Authors

    • June 2023
    • Faculty Research

    Optimalen Capital Spreadsheet Supplement

    By: Malcolm Baker, Elisabeth Kempf and Jonathan Wallen
    • June 2023
    • Faculty Research

    Optimalen Capital

    By: Malcolm Baker, Elisabeth Kempf and Jonathan Wallen
    • May 2023
    • Journal of Financial Economics

    Political Ideology and International Capital Allocation

    By: Elisabeth Kempf, Mancy Luo, Larissa Schäfer and Margarita Tsoutsoura
More from the Authors
  • Optimalen Capital Spreadsheet Supplement By: Malcolm Baker, Elisabeth Kempf and Jonathan Wallen
  • Optimalen Capital By: Malcolm Baker, Elisabeth Kempf and Jonathan Wallen
  • Political Ideology and International Capital Allocation By: Elisabeth Kempf, Mancy Luo, Larissa Schäfer and Margarita Tsoutsoura
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College