Political uncertainty and investment: Causal evidence from US gubernatorial elections

• 成果类型: Article
• 署名作者: Jens, Candace E.
• 署名单位: Tulane University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.01.034
• 发表日期: 2017
• 页码: 563-579
• 关键词: investment; political uncertainty; Gubernatorial elections

摘要

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.