Karavitis, P. and Kazakis, P. (2022) Political sentiment and syndicated loan borrowing costs of multinational enterprises. Journal of International Financial Markets, Institutions and Money, 78, 101537. (doi: 10.1016/j.intfin.2022.101537)
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Abstract
International business literature widely recognizes that political forces play a crucial role in modern corporations. Yet, rare are the studies of how foreign operations mitigate the detrimental effect that firm-level political exposure has on the cost of lending. We study such channels in a sample of U.S. corporations with foreign subsidiaries in 69 countries. We proxy firm-level political exposure via political sentiment. We show that firms with a lower political sentiment (i.e., higher political exposure) have a higher cost of lending. We document that multinational enterprises with a presence in many countries, and those having an extended network of foreign subsidiaries can lower the harmful effects of increased political uncertainty. This outcome also holds in the presence of foreign economies of scale, and when multinational corporations have foreign subsidiaries in countries with higher political polarization.
Item Type: | Articles |
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Status: | Published |
Refereed: | Yes |
Glasgow Author(s) Enlighten ID: | Karavitis, Dr Panagiotis and Kazakis, Dr Pantelis |
Authors: | Karavitis, P., and Kazakis, P. |
College/School: | College of Social Sciences > Adam Smith Business School College of Social Sciences > Adam Smith Business School > Accounting and Finance |
Journal Name: | Journal of International Financial Markets, Institutions and Money |
Publisher: | Elsevier |
ISSN: | 1042-4431 |
ISSN (Online): | 1873-0612 |
Published Online: | 09 March 2022 |
Copyright Holders: | Copyright © 2022 The Authors |
First Published: | First published in Journal of International Financial Markets, Institutions and Money 78: 101537 |
Publisher Policy: | Reproduced under a Creative Commons License |
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