The latest in the Sasin Research Seminar series was a fascinating talk by Sasin Visiting Professor Suwongrat Papangkorn and her co-authors, Sasin Associate Professor Pattanaporn Chatjuthamard, and Sasin Visiting Professor Pornsit Jiraporn, examining the effect of economic policy uncertainty (EPU) on redeployable assets. The lecture began with how the political uncertainty policy impact economics. One of the classic examples would be the trade war between the US and China starting in 2018, which result in adverse impacted on America. Another example of economic impact was China’s Zero Covid Strategy and how the lockdowns affected things like retail sales. In addition, the trend of global uncertainty is upward trend and has now reached an all-time high, and this is why more research is needed. Though studies have shown that an increase in EPU can decrease capital expenditure and investment, corporate borrowing, management risk appetite, and the number of M&A transactions. It would also see a rise in the cost of finance. However, no studies have looked at the impact on asset redeployability. In times of uncertainty, building flexibility into company plans and strategies is important. Businesses need to be flexible. One way to do this is through asset redeployment. This is the strategic reallocation of assets from a less profitable use to a more profitable use. With the right asset redeployment plan, companies can get better results for the same cost. Put another way – asset redeployability is the extent to which assets have alternative uses. The implications are that increasing asset redeployability leads to a decrease in investment irreversibility, as there tends to be lower investment when there’s uncertainty. There will also be a decrease in liquidity merges and the cost of capital and an increase in asset liquidation values and the amount and maturity of debt. The key contributions of the research were discussed, and a couple of hypotheses were put forward. The first was that in times of higher uncertainty, agency conflicts and information asymmetry could lead to managerial myopia. This is due to management seeking short-term gains to hit targets and focus on how assets are currently utilized. Consequently, there will be lower asset deployability. The other hypothesis was that in times of high economic uncertainty, it is less predictable how assets may be deployed in the future. Therefore, acquiring assets that could be redeployed for different purposes would be more prudent, resulting in higher asset deployability. To test their hypotheses, the researchers used 14,846 US firm-year observations from 1996 to 2014. Professor Suwongrat and her colleagues explained the variables used (dependent, independent, control), the underlying components, asset redeployability measurements, baseline models, and the robustness tests. The results proved the managerial myopia hypothesis, finding uncertainty significantly diminishes asset redeployability. In particular, a rise in EPU by one standard deviation lowers asset redeployability by 9.06%. 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. The study is the first to link EPU to asset redeployability. The talk was followed by a Q&A session that discussed a range of related topics. These included how asset-level and industry-level redeployability were calculated; the variation in redeployability across industries; the EPU, FEARS and other indexes (and where they are used); and how the data and management reaction might vary in different countries.