Economic Policy Uncertainty, Financial Leverage, and Corporate Investment: Evidence from U.S. Firms

Hamza Almustafa (), Imad Jabbouri and Ploypailin Kijkasiwat
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Hamza Almustafa: Department of Banking and Financial Sciences, Faculty of Economics and Administrative Sciences, The Hashemite University, Zarqa 13133, Jordan
Imad Jabbouri: School of Business Administration, Al Akhawayn University, Ifrane P.O. Box 104, Morocco
Ploypailin Kijkasiwat: The Faculty of Business Administration and Accountancy, Khon Kaen University, Khon Kaen 40002, Thailand

Economies, 2023, vol. 11, issue 2, 1-19

Abstract: This paper examines the effect of economic policy uncertainty (EPU) on firm-level investment and corporate financial leverage. The panel data of 1072 firms traded on the New York Stock Exchange (NYSE), New York Stock Exchange Market (NYSE MKT) (formerly known as American Stock Exchange—AMEX), or NASDAQ over the period 2012–2021 was analyzed using the fixed-effect model. The empirical results show that the financial leverage of a firm is negatively affected by EPU. Additionally, EPU depresses firms’ investment decisions and debt financing. Our results are robust when alternative measures of our main variables are used.

Keywords: economic policy uncertainty (EPU); financial leverage; capital structure; corporate investment (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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