Political uncertainty and corporate investment cycles

Julio, B and Yook, Y (2012) Political uncertainty and corporate investment cycles. Journal of Finance, 67 (1). pp. 45-83. ISSN 0022-1082

Abstract

We document cycles in corporate investment corresponding with the timing of national elections around the world. During election years, firms reduce investment expenditures by an average of 4.8% relative to nonelection years, controlling for growth opportunities and economic conditions. The magnitude of the investment cycles varies with different country and election characteristics. We investigate several potential explanations and find evidence supporting the hypothesis that political uncertainty leads firms to reduce investment expenditures until the electoral uncertainty is resolved. These findings suggest that political uncertainty is an important channel through which the political process affects real economic outcomes.

More Details

Item Type: Article
Subject Areas: Finance
Date Deposited: 17 May 2016 11:55
Last Modified: 19 Mar 2024 02:25
URI: https://lbsresearch.london.edu/id/eprint/340
More

Export and Share


Download

Full text not available from this repository.

Statistics

Altmetrics
View details on Dimensions' website

Downloads from LBS Research Online

View details

Actions (login required)

Edit Item Edit Item