期刊
JOURNAL OF FINANCIAL ECONOMICS
卷 124, 期 3, 页码 563-579出版社
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jfineco.2016.01.034
关键词
Investment; Political uncertainty; Gubernatorial elections
I examine the link between political uncertainty and firm investment using U.S. gubernatorial elections as a source of plausibly exogenous variation in uncertainty. Investment declines 5% before all elections and up to 15% for subsamples of firms particularly susceptible to political uncertainty. I use term limits as an instrumental variable (IV) for election closeness. Because close elections are related to economic downturns, I find that the effect of close elections on investment is understated by more than half by ordinary least squares (OLS). Post-election rebounds in investment depend on whether an incumbent is re-elected. Finally, I provide evidence that firms delay equity and debt issuances tied to investments before elections. (C) 2017 Published by Elsevier B.V.
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