What's in a (School) Name? Racial Discrimination in Higher Education Bond Markets

69 Pages Posted: 5 Feb 2016 Last revised: 27 Jun 2018

See all articles by Casey Dougal

Casey Dougal

Florida State University

Pengjie Gao

University of Notre Dame - Mendoza College of Business

William J. Mayew

Duke University - Fuqua School of Business

Christopher A. Parsons

Foster School of Business, University of Washington

Date Written: June 16, 2018

Abstract

Historically black colleges and universities (HBCUs) pay higher underwriting fees to issue tax-exempt bonds, compared to similar non-HBCUs. This appears to reflect higher costs of finding willing buyers: the effect is three times larger in the far Deep South, where racial animus remains the most severe. Credit quality plays little role. For example, identical differences are observed between HBCU and non-HBCUs: 1) with AAA ratings, and/or 2) insured by the same company, even before the 2008 Financial Crisis. HBCU-issued bonds are also more expensive to trade in secondary markets, and when they do, sit in dealer inventory longer.

Keywords: Race discrimination, higher education, municipal finance

JEL Classification: H75, I24, J15

Suggested Citation

Dougal, Casey and Gao, Pengjie and Mayew, William J. and Parsons, Christopher A., What's in a (School) Name? Racial Discrimination in Higher Education Bond Markets (June 16, 2018). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2727763 or http://dx.doi.org/10.2139/ssrn.2727763

Casey Dougal

Florida State University ( email )

Tallahasse, FL 32306
United States

Pengjie Gao

University of Notre Dame - Mendoza College of Business ( email )

246 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
(574) 631-8048 (Phone)

HOME PAGE: http://​sites.google.com/site/gpengjie/

William J. Mayew (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7781 (Phone)
919-660-7971 (Fax)

HOME PAGE: http://www.fuqua.duke.edu/faculty/alpha/mayew.htm

Christopher A. Parsons

Foster School of Business, University of Washington ( email )

PACCAR HALL
4273 E Stevens Way NE
Seattle, WA 98195
United States

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