Political uncertainty of impeachment upon corporate investment decisions

Abstract

This study aims to verify if there is a negative relation between the investment of Brazilian companies and the impeachment of former president Dilma Rousseff. The period of analysis considers three previous (2013-2015) and subsequent (2016-2018) years to impeachment. As a result, although usually a process of impeachment provokes an environment of political instability, in the case of Brazil, the vice president, member of a center-right party, satisfied expectations of positive change. The impeachment represented loss of confidence in the political class, but also an anticipated turnaround of the country's economy. As a consequence, companies did not reduce their investments.