Chapter | Television and Political Advertising | 1991

Reactions to Political Advertising Depend on the Nature of the Voter-Candidate Bond

by J. A. Deighton, L. F. Alwitt and J. Grimm

Keywords: Advertising Campaigns; Political Elections; Relationships; Attitudes; Advertising Industry;

Format: Print

Citation:

Deighton, J. A., L. F. Alwitt, and J. Grimm. "Reactions to Political Advertising Depend on the Nature of the Voter-Candidate Bond." In Television and Political Advertising. Vol. 1, edited by F. Biocca. Hillsdale, NJ: Lawrence Erlbaum Associates, 1991.

We show that the credit quality of corporate debt issuers deteriorates during credit booms, and that this deterioration forecasts low excess returns to corporate bondholders. The key insight is that changes in the pricing of credit risk disproportionately affect the financing costs faced by low quality firms, so the debt issuance of low quality firms is particularly useful for forecasting bond returns. We show that a significant decline in issuer quality is a more reliable signal of credit market overheating than rapid aggregate credit growth. We use these findings to investigate the forces driving time-variation in expected corporate bond returns.

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Reactions to Political Advertising Depend on the Nature of the Voter-Candidate Bond

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