The effects of economic policy uncertainty and large investment project on leverage (early view)

Abstract

This study aims to investigate the effects of economic policy uncertainty (EPU) and large investment projects on the leverage ratio using 2,865 listed firms in NYSE, NASDAQ, and AMEX from 1990 to 2019. The data is analyzed through the fixed effect panel regression model. The results show that EPU negatively affects firms’ leverage, which are reduced through joint effects with large investment for five years. This study also aims demonstrate firms' financial flexibility motive to protect the debt capacity of large investments and enhance their capabilities.