Australian policy uncertainty and corporate investment

Chen, X; Le, CHA; Shan, Y; Taylor, S

Australian policy uncertainty and corporate investment

Chen, X Le, CHA Shan, Y

Taylor, S

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Publisher:: ELSEVIER
Publication Type:: Journal Article
Citation:: Pacific Basin Finance Journal, 2020, 61
Issue Date:: 2020-06-01

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Field	Value	Language
dc.contributor.author	Chen, X
dc.contributor.author	Le, CHA
dc.contributor.author	Shan, Y https://orcid.org/0000-0003-2156-8722
dc.contributor.author	Taylor, S https://orcid.org/0000-0001-8870-4966
dc.date.accessioned	2021-08-11T09:51:06Z
dc.date.available	2021-08-11T09:51:06Z
dc.date.issued	2020-06-01
dc.identifier.citation	Pacific Basin Finance Journal, 2020, 61
dc.identifier.issn	0927-538X
dc.identifier.issn	1879-0585
dc.identifier.uri	http://hdl.handle.net/10453/150096
dc.description.abstract	This study examines the impact of economic policy uncertainty (EPU) on capital investment by Australian firms. Following a replication of prior US evidence (Gulen and Ion 2016), we show that EPU has a persistent and negative effect (up to four years) on capital investment by Australian Stock Exchange (ASX) listed firms, in contrast to the more short-lived effect of EPU in the US. The different results are consistent with the high proportion of ASX-listed firms in the resources and mining industries, where investment projects frequently proceed in stages and have time-to-build considerations. In accordance with real option theory, the findings reinforce the notion that EPU can dampen investment opportunities due to investment irreversibility.
dc.language	English
dc.publisher	ELSEVIER
dc.relation	http://purl.org/au-research/grants/arc/DP180100388
dc.relation.ispartof	Pacific Basin Finance Journal
dc.relation.isbasedon	10.1016/j.pacfin.2020.101341
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1501 Accounting, Auditing and Accountability, 1502 Banking, Finance and Investment
dc.subject.classification	Finance
dc.title	Australian policy uncertainty and corporate investment
dc.type	Journal Article
utslib.citation.volume	61
utslib.for	1502 Banking, Finance and Investment
utslib.for	1501 Accounting, Auditing and Accountability
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2021-08-11T09:51:05Z
pubs.publication-status	Published
pubs.volume	61

Abstract:

This study examines the impact of economic policy uncertainty (EPU) on capital investment by Australian firms. Following a replication of prior US evidence (Gulen and Ion 2016), we show that EPU has a persistent and negative effect (up to four years) on capital investment by Australian Stock Exchange (ASX) listed firms, in contrast to the more short-lived effect of EPU in the US. The different results are consistent with the high proportion of ASX-listed firms in the resources and mining industries, where investment projects frequently proceed in stages and have time-to-build considerations. In accordance with real option theory, the findings reinforce the notion that EPU can dampen investment opportunities due to investment irreversibility.

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http://hdl.handle.net/10453/150096