State-level politics: Do they influence corporate investment decisions?

Paresh Kumar Narayan, Seema Narayan (), Vuong Thao Tran and Kannan Thuraisamy

International Review of Financial Analysis, 2021, vol. 74, issue C

Abstract: Motivated by the real options theory, we develop the hypothesis that political outcomes (POs) influence corporate investment (CI). We show that POs influence CI strongly when a sample of all 1331 Australian firms are modelled as a panel. The effect of POs on CI at the Australian state-level is heterogenous with some states more affected than others and with some PO variables more influential than others. We also confirm that when confronted with a large sample of firms, firm characteristics such as political connections, size and capital intensity do matter in terms of whether POs influence CI.

Keywords: Corporate investment; Political outcomes; Australia (search for similar items in EconPapers)
JEL-codes: G15 G18 G32 G38 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:74:y:2021:i:c:s105752192100051x

DOI: 10.1016/j.irfa.2021.101708

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