Open AccessTERRORIST ATTACKS AND CORPORATE INVESTMENT IN INDONESIA
Author(s) -
Dat Thanh Nguyen,
Dinh Hoang Bach Phan,
Van Ky Long Nguyen
Publication year - 2021
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 4
ISSN - 2460-9196
DOI - 10.21098/bemp.v24i1.1283
Subject(s) - terrorism , investment (military) , robustness (evolution) , capital investment , business , monetary economics , economics , econometrics , finance , political science , biochemistry , chemistry , politics , law , gene
Using yearly data from 1997 to 2017, this paper studies the effect of terrorism (number of attacks) on corporate investment in Indonesia. Applying an investment-type model, we show that firms reduce their capital expenditure due to an increase in the number of terrorist attacks. On average, a one standard deviation increase in the number of terrorist attacks reduces corporate investment by 9.23%. We also find heterogenous reactions of firms to terrorism across different sectors and different panels based on firm characteristics. Finally, our main results remain consistent after performing several robustness tests.