Browsing by Author "Owusu-Manu, Samuel"

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    Economic Policy Uncertainty and Cost of Capital: The Mediating Effects of Foreign Equity Portfolio Flow
    (Springer, 2022-03-12) Kwabi, Frank; Owusu-Manu, Samuel; Boateng, Agyenim; Ezeani, Ernest; Du, Min
    We investigate whether economic policy uncertainty and the interaction of foreign equity portfolio flow and economic policy uncertainty impact the cost of capital. Using panel data of 20 countries from 2001 to 2018, we find economic policy uncertainty to exert a positive effect on the cost of capital. However, the interaction between foreign equity portfolio flow and economic policy uncertainty has a negative effect on the cost of capital, demonstrating that, the combined effect of foreign equity portfolio flow and economic policy uncertainty has the opposite effect (i.e., reduces the cost of capital). Our results are robust to alternative specifications and endogeneity.
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    The impact of economic policy uncertainty on cost of capital, stock market development, and debt home and foreign bias: cross country evidence.
    (De Montfort University, 2023-06) Owusu-Manu, Samuel
    The study examines three empirical questions. The first investigates the impact of economic policy uncertainty on the cost of capital. The second examines the impact of economic policy uncertainty on stock market development. The third explores the role of economic policy uncertainty on debt home and foreign bias. In the first empirical chapter, we investigate whether economic policy uncertainty and the interaction of foreign equity portfolio flow and economic policy uncertainty impact the cost of capital. Using panel data from 20 countries from 2001 to 2018, we find economic policy uncertainty to exert a positive effect on the cost of capital. However, the interaction between foreign equity portfolio flow and economic policy uncertainty has a negative effect on the cost of capital, demonstrating that the combined effect of foreign equity portfolio flow and economic policy uncertainty has the opposite effect (i.e., reduces the cost of capital). The results are robust to alternative specifications and endogeneity. In the second empirical chapter, we find that economic policy uncertainty hampers stock market development. This is consistent with our hypothesis and the notion that economic policy uncertainty influences investors to halt investment decisions and adopt a wait-and-see attitude, thereby reducing stock market activities. Nonetheless, the interaction between institutional quality and economic policy uncertainty has a positive impact on stock market development. This implies that institutional quality brings to bear greater transparency and better disclosure practices which are essential for the efficient allocation of financial resources, thereby neutralising the negative effect of economic policy uncertainty. The results of our study are very important as policy decision-makers can appreciate that strong institutions can forestall the negative effect caused by economic policy uncertainty on stock markets. In the third empirical chapter, we find that economic policy uncertainty increases debt home bias. We also find that economic policy uncertainty has a negative effect on debt foreign bias. Further analysis shows that central bank independence and transparency mediate the impact of economic policy uncertainty on debt home and foreign bias. The implication is that countries will continue to attract debtholders during periods of economic policy uncertainty when there is an independent and transparent central bank.