Political Uncertainty and Corporate Investment Cycles
Tuesday, June 19th, 2012 -- By ETI read this paper from Journal of Finance (2012 Feb issue). It tells an interesting story: during election years, firms reduce investment expenditures by an average of 4.8% relative to nonelection years, across nations, controlling for growth opportunities and economic conditions.
The authors explained the observation with political uncertainty. I wonder if more can be done on this. Does political uncertainty affect individual firms or the economy in general? Would these elections also affect end consumers/voters? There seems to be a lot of interesting questions related to this topic.
