Corporate governance and investment sensitivity to policy uncertainty in Brazil

Daniel Ferreira Caixe

Emerging Markets Review, 2022, vol. 51, issue PB

Abstract: In this study, I investigate the role of corporate governance on the relationship between investment and economic policy uncertainty (EPU). Exploring the Brazilian context of poor investor protection, high private benefits of control and premium listing segments, I provide evidence that the negative impact of EPU on investment is stronger for well-governed firms. The moderating effect of corporate governance on investment-EPU sensitivity is present in companies with different levels of financial constraints and investment irreversibility. My findings support the view that controlling owners prefer riskier investments when expropriating minority shareholders and stricter governance practices may mitigate such an opportunistic behavior.

Keywords: Economic policy uncertainty; Investment; Corporate governance; Agency conflicts (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:51:y:2022:i:pb:s1566014121000911

DOI: 10.1016/j.ememar.2021.100883

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