Purpose

This paper aims to examine how a firm’s political party orientation (Republican or Democratic), which is measured as the composite index based on the political party leanings of top managers, affects bank loan contracts. This study also investigates how the political culture of local states has a significant impact on loan contracts.

Design/methodology/approach

This research uses various databases including the Loan Pricing Corporation’s DealScan database, financial covenant violation indicators based on the Securities and Exchange Commission (SEC) filings, firm bankruptcy filings and political culture index data to examine the impact of political orientation on the cost of debt. This paper also includes the state level of gun ownership and bachelor’s degrees to investigate how local political culture affects the loan contract. To control endogenous concerns, this paper uses an instrumental variable analysis.

Findings

Firms that have Republican-oriented political identities pay lower yield spreads for the main costs of debt including all-in-spread-drawn and all-in-spread-undrawn. This pattern is consistent with other fees of bank loans. This paper finds that an increase in conservative political policies toward Republican orientations is negatively associated with the cost of debt. The main findings also show that the political culture in the state where the headquarters of the borrowing firm are located plays an important role in bank loan contracts.

Originality/value

The findings in this paper provide evidence that a firm’s political party orientation significantly affects the loan contract terms in both pricing and non-pricing terms. To the best of the author’s knowledge, this is the first study that shows the importance of political party identification on loan contracts by separating the sample into Republican, neutral and Democratic.

中文翻译：

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企业政党意识形态重要吗？来自银行贷款合同的证据

目的

本文旨在研究公司的政党倾向（共和党或民主党）如何影响银行贷款合同，该倾向被衡量为基于高层管理人员的政党倾向的综合指数。本研究还调查了地方州的政治文化如何对贷款合同产生重大影响。

设计/方法/方法

本研究使用各种数据库，包括贷款定价公司的 DealScan 数据库、基于证券交易委员会 (SEC) 文件的金融契约违规指标、公司破产申请和政治文化指数数据，以检查政治取向对债务成本的影响。本文还包括州级的枪支拥有率和学士学位，以调查当地政治文化如何影响贷款合同。为了控制内生性问题，本文使用了工具变量分析。

发现

具有共和党导向的政治身份的公司为债务的主要成本支付较低的收益率差，包括全息差提取和全息差未提取。这种模式与银行贷款的其他费用一致。本文发现，对共和党倾向的保守政治政策的增加与债务成本呈负相关。主要发现还表明，借款公司总部所在州的政治文化在银行贷款合同中起着重要作用。

原创性/价值

本文的研究结果提供了证据，表明公司的政党取向显着影响定价和非定价条款的贷款合同条款。据作者所知，这是第一项通过将样本分为共和党、中立和民主党来显示政党识别对贷款合同的重要性的研究。