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Uncertain times, managerial myopia, and asset redeployability: Evidence from economic policy uncertainty

By Suwongrat Papangkorn, Ph.D. Visiting Professor, Sasin School of Management Assoc. Professor Pattanaporn Chatjuthamard, Ph.D. Finance Faculty, Sasin School Management Professor Pornsit Jiraporn, Ph.D. Professor of Finance, Pennsylvania State University, School of Graduate Professional Studies Friday September 2, 2022, 12:00 -13:00 pm. Venue: Room 201, Sasin School of Management. Please register here to reserve your seat. Summary: Exploiting a novel measure of asset redeployability, we explore the effect of economic policy uncertainty (EPU) on redeployable assets. Our results reveal that greater uncertainty diminishes asset redeployability significantly. In particular, a rise in EPU by one standard deviation lowers asset redeployability by 9.06%. Our findings corroborate the managerial myopia hypothesis. More uncertainty reduces managers’ job security and exacerbates managerial short-termism, where managers tend to focus more on assets that are currently useful in the short run than how assets may be redeployed in the long run. Further analysis confirms the results, including propensity score matching, entropy balancing, instrumental-variable analysis, GMM dynamic panel data analysis, and using alternate proxies for uncertainty. Our study is the first to link EPU to asset redeployability.   For more information please contact Khun Nanthapak Pinyo at 091 479 4551, 02 218 4036 or researchseminar@sasin.edu.