#4532. Political Corruption and Cost of Equity

August 2026publication date
Proposal available till 19-05-2025
4 total number of authors per manuscript0 $

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Journal’s subject area:
Business, Management and Accounting (miscellaneous);
Social Sciences (miscellaneous);
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Abstract:
Using U.S. Department of Justice data on state-level political corruption, we find that, consistent with the Harmful Corruption Environment Hypothesis (HCEH), firms situated in states with higher levels of corruption incur higher costs of equity (CoEs). These results are robust for additional controls, propensity score matching, use of instrumental variables, exogenous shocks, and alternate measures for main dependent and primary independent research variables. Our study extends the stream of literature that investigates the influence of local ethical or trust factors on CoE.
Keywords:
cost of equity capital; equity pricing; state-level political corruption

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