Abstract
This paper examines the impacts of firm-level political risks on intellectual capital investment decisions and how managerial ability adjusts this relationship. Using a broad sample of U.S firms from 2002 to 2021, our results show that firms with higher political risks reduce their investment in intellectual capital. This impact is more prominent for high-tech firms and firms with high financial distress, external financial dependence, and lower institutional ownership. Further, we find supportive evidence that managerial ability can prevent a substantial dimension (around 20%–40%) of the destructive impact of political risk on intellectual capital investment, which is also driven by firm-specific characteristics. These findings hold after a battery of robustness tests.
| Original language | English |
|---|---|
| Article number | 103020 |
| Pages (from-to) | 1-18 |
| Number of pages | 18 |
| Journal | International Review of Financial Analysis |
| Volume | 91 |
| DOIs | |
| Publication status | Published - Jan 2024 |
Bibliographical note
Copyright © 2023 The Authors. Published by Elsevier Inc. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.Keywords
- Financial constraint
- Firm-level political risk
- Intellectual capital
- Managerial ability