Geopolitical risk and corporate investment: How do politically connected firms respond?

Ahmed W. Alam, Reza Houston and Ashupta Farjana

Finance Research Letters, 2023, vol. 53, issue C

Abstract: This letter reveals how political connection affects the relationship between geopolitical risk (GPR) and corporate investment. Using a large sample of U.S. firms from 1996 to 2018, we examine if political connection moderates the negative effect of GPR on corporate investments. Our analysis finds that politically connected firms can mitigate this negative relationship. Firms that make political action committee (PAC) contributions and lobby members of Congress invest more than their non-politically connected competitors. These results remain valid through a combination of robustness analyses.

Keywords: Geopolitical risk; Corporate investment; Political connection; PAC contribution; Lobbying expenditure (search for similar items in EconPapers)
JEL-codes: D72 D81 G30 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000557

DOI: 10.1016/j.frl.2023.103681

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