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

See all articles by Isaac Marcelin

Isaac Marcelin

University of Maryland Eastern Shore

Sheryl-Ann Stephen

Butler University

Fassil Fanta

University of Wisconsin - Stout

Mussie M. Teclezion

affiliation not provided to SSRN

Date Written: January 9, 2019

Abstract

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

Marcelin, Isaac and Stephen, Sheryl-Ann and Fanta, Fassil and Teclezion, Mussie M., Political Regimes, Investment and Electoral Uncertainty (January 9, 2019). Research in International Business and Finance, Volume 47, January 2019, Pages 580-599, Available at SSRN: https://ssrn.com/abstract=3401514 or http://dx.doi.org/10.2139/ssrn.3401514

Isaac Marcelin (Contact Author)

University of Maryland Eastern Shore ( email )

11868 Academic Oval
Princess Anne, MD 21853
United States

Sheryl-Ann Stephen

Butler University ( email )

4600 Sunset Avenue
Indianapolis, IN 46208
United States

Fassil Fanta

University of Wisconsin - Stout ( email )

Menomonie , WI 54751
United States

Mussie M. Teclezion

affiliation not provided to SSRN ( email )

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