Abstract
Motivated by the real options theory, we develop the hypothesis that political outcomes (POs) influence corporate investment (CI). We show that POs influence CI strongly when a sample of all 1331 Australian firms are modelled as a panel. The effect of POs on CI at the Australian state-level is heterogenous with some states more affected than others and with some PO variables more influential than others. We also confirm that when confronted with a large sample of firms, firm characteristics such as political connections, size and capital intensity do matter in terms of whether POs influence CI.
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