Matching Items (2)
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- All Subjects: Political Uncertainty
- Creators: Hillman, Amy
Description
In this study, I test whether firms reduce the information asymmetry stemming from the political process by investing in political connections. I expect that connected firms enjoy differential access to relevant political information, and use this information to mitigate the negative consequences of political uncertainty. I investigate this construct in the context of firm-specific investment, where prior literature has documented a negative relation between investment and uncertainty. Specifically, I regress firm investment levels on the interaction of time-varying political uncertainty and the degree of a firm's political connectedness, controlling for determinants of investment, political participation, general macroeconomic conditions, and firm and time-period fixed effects. Consistent with prior work, I first document that firm-specific investment levels are significantly lower during periods of increased uncertainty, defined as the year leading up to a national election. I then assess the extent that political connections offset the negative effect of political uncertainty. Consistent with my hypothesis, I document the mitigating effect of political connections on the negative relation between investment levels and political uncertainty. These findings are robust to controls for alternative explanations related to the pre-electoral manipulation hypothesis and industry-level political participation. These findings are also robust to alternative specifications designed to address the possibility that time-invariant firm characteristics are driving the observed results. I also examine whether investors consider time-varying political uncertainty and the mitigating effect of political connections when capitalizing current earnings news. I find support that the earnings-response coefficient is lower during periods of increased uncertainty. However, I do not find evidence that investors incorporate the value relevant information in political connections as a mitigating factor.
ContributorsWellman, Laura (Author) / Dhaliwal, Dan (Thesis advisor) / Hillegeist, Stephen (Thesis advisor) / Walther, Beverly (Committee member) / Mikhail, Mike (Committee member) / Hillman, Amy (Committee member) / Brown, Jenny (Committee member) / Arizona State University (Publisher)
Created2014
Description
The beginnings of this paper developed from the initial question of: how can tribal nations create private economies on their reservations? Written and researched from an undergraduate student perspective, this paper begins to answer the question by analyzing the historical and current states of Indian Country's diverse tribal economies. Additionally, this paper will identify various tribal economic development challenges with a specific emphasis on education attainment as a key factor. Then, a solution will be presented in the form of a tribal business program modeled within the W.P. Carey School of Business at Arizona State University located in Tempe, Arizona. The solution is grounded in the idea that a highly qualified workforce is the best resource for economic development.
ContributorsTso, Cora Lee (Author) / Miller, Robert (Thesis director) / Hillman, Amy (Committee member) / School of Politics and Global Studies (Contributor) / American Indian Studies Program (Contributor, Contributor) / Barrett, The Honors College (Contributor)
Created2016-12