CEO inside debt and corporate political disclosure

This paper investigates the impact of CEO inside debt holdings on corporate political disclosure (CPD) using a sample of S&P 500 firms. Our results indicate that inside debt holdings motivate CEOs to enhance CPD. These findings are robust across various proxies and endogeneity tests. Our mediation analysis shows that CEOs with high levels of inside debt use CPD to reduce the firm’s probability of default, improve the firm’s information environment, protect corporate reputation, and secure more favorable debt contracting terms. Cross-sectional analysis reveals that the effect of CEO inside debt on CPD is stronger in financially constrained firms and in firms headquartered in more corrupt states, and it is more pronounced among Democratic CEOs compared to Republican CEOs. Overall, these findings highlight the significance of CEO incentive structures in shaping corporate disclosures.