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Political regimes, investment and electoral uncertainty

Isaac Marcelin, Sheryl-Ann K. Stephen, Fassil Fanta and Mussie Tecklezion

Research in International Business and Finance, 2019, vol. 47, issue C, 580-599

Abstract: This study looks at firm’s investment spending in fixed and intangible assets around three types of national elections: presidential, joint presidential and legislative, and parliamentary elections. Investment in fixed assets declines by up to 2.3% during presidential elections, and 4.43% in joint presidential and legislative elections years. On the other hand, intangible investment decreases by 4.47% 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 postelection 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 (search for similar items in EconPapers)
JEL-codes: D92 E22 G11 O16 P16 P26 (search for similar items in EconPapers)
Date: 2019
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