Political Uncertainty and Corporate Investment Cycles
By ET
I 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.
August 8th, 2012 at 4:39 am
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