Corporate Financial Policy under Political Uncertainty: International Evidence from National Elections
We document significant cycles in corporate financial policies around national elections across a sample of 48 countries. Consistent with the theory of corporate investment under uncertainty, firms reduce investment expenditures by an average 4.5％ in the year leading up to the election, controlling for firm characteristics and economic conditions. Firms also increase their cash holdings by 5.4％ in the year leading up to the election. These investment cycles are more pronounced in countries with parliamentary political systems, civil law legal origins, and among countries with higher measures of political risk. The cycles are more pronounced for firms with a lower proportion of sales coming from exports. Within countries, the effects are larger among more politically sensitive industries. We also find that investment cycles are stronger around elections with more uncertain outcomes as measured by the closeness of election results. These results suggest that political uncertainty imposes significant costs on the real activities of firms.
Investment Under Uncertainty Politics and Finance International Corporate Finance
BRANDON JULIO YOUNGSUK YOOK
Department of Finance,London Business School,Regent’s Park,London NW1 4SA,United Kingdom SKK Graduate School of Business,SungKyunKwan University,53 Myungryun-dong 3-ga Jongno-gu Seoul 110-7
国际会议
大连
英文
1-24
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）