Political uncertainty and corporate investment: Empirical evidence from China

Using data of Chinese listed companies and local officials' turnover, this paper examines the impact of political uncertainty on corporate investment in China. Results show that during the change of officials, companies will significantly reduce investment, despite the different measures of political uncertainty. This situation is more obvious for external appointment, state-owned enterprises and capitalintensive firms. Moreover, this paper creatively finds that this influence of provincial political uncertainty is more pronounced than that of municipal political uncertainty. Besides, the volatility of corporate investment increase with political uncertainty.