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.