Cost of debt financing: Does political connection matter?

• Impacts of political connections on cost of debt differ depending on the incentives in establishing political ties. • Executive and non-executive functions of a chairperson can be a distinctive measure to classify the underlying incentives. • PCON executive chairpersons benefit the firms, but PCON non-executive chairpersons are costly to firms. • Better corporate governance can mitigate unethical political influences and rent-seeking activities.