Political Regimes, Investment and Electoral Uncertainty
Research in International Business and Finance, Volume 47, January 2019, Pages 580-599
47 Pages Posted: 21 Jun 2019
Date Written: January 9, 2019
This study looks at firms’ investment spending in fixed and intangible assets around three types of national elections: presidential, joint presidential, and legislative and parliamentary elections. Investments in fixed assets decline by up to 2% during presidential elections, and 4.44% in joint presidential, and legislative elections. On the other hand, intangible investments decrease by 4.36% in parliamentary election years. Moreover, investment responses to electoral shocks differ markedly within political systems and countries’ institutional settings. Investment levels shift significantly downward in pre- and resume in post-election years. The electoral effect results in a net loss in investment over the election cycle.
Keywords: political economy, policy uncertainty, electoral uncertainty, investment, capital intensity, intangible intensity
JEL Classification: D92, E22, G11, O16, P16, P26
Suggested Citation: Suggested Citation