phan-terroristattacksand-2021.pdf (426.1 kB)
Terrorist attacks and corporate investment in Indonesia
journal contributionposted on 2021-04-15, 00:00 authored by D T Nguyen, D H B Phan, V K L Nguyen
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.