Local Political Uncertainty, Family Control and Investment Behavior

Journal of Financial & Quantitative Analysis, forthcoming

47 Pages Posted: 28 Nov 2016 Last revised: 5 Oct 2020

See all articles by Mario Daniele Amore

Mario Daniele Amore

Bocconi University - Department of Management and Technology

Alessandro Minichilli

Bocconi University - Department of Management and Technology

Date Written: May 4, 2017

Abstract

Estimating difference-in-differences models on a comprehensive dataset of Italian companies, we provide novel insights into the literature on political uncertainty and firm investment. We first establish that local political uncertainty leads to declining investment. Next, we show that family control neutralizes this effect: family firms are more likely than other firms to invest during politically uncertain times, especially when operating in industries dependent on public spending and/or managed by family members. Finally, we document that this investment resilience of family firms under political uncertainty translates into significantly greater profitability and growth.

Keywords: family firms, political uncertainty, election, local politics

JEL Classification: D72, G31, H70, R50

Suggested Citation

Amore, Mario Daniele and Minichilli, Alessandro, Local Political Uncertainty, Family Control and Investment Behavior (May 4, 2017). Journal of Financial & Quantitative Analysis, forthcoming, Available at SSRN: https://ssrn.com/abstract=2875628 or http://dx.doi.org/10.2139/ssrn.2875628

Mario Daniele Amore (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Alessandro Minichilli

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

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