Firm-level political risk and intellectual capital investment: Does managerial ability matter?

Nhan Huynh, Quynh Nga Le and Quang Thien Tran

International Review of Financial Analysis, 2024, vol. 91, issue C

Abstract: This paper examines the impacts of firm-level political risks on intellectual capital investment decisions and how managerial ability adjusts this relationship. Using a broad sample of U.S firms from 2002 to 2021, our results show that firms with higher political risks reduce their investment in intellectual capital. This impact is more prominent for high-tech firms and firms with high financial distress, external financial dependence, and lower institutional ownership. Further, we find supportive evidence that managerial ability can prevent a substantial dimension (around 20%–40%) of the destructive impact of political risk on intellectual capital investment, which is also driven by firm-specific characteristics. These findings hold after a battery of robustness tests.

Keywords: Firm-level political risk; Intellectual capital; Managerial ability; Financial constraint (search for similar items in EconPapers)
JEL-codes: G18 G30 G31 G38 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005367

DOI: 10.1016/j.irfa.2023.103020

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