Economic policy uncertainty and corporate investment: Evidence from the U.S. hospitality industry

The study of how uncertainty affects hospitality firms’ decisions is gaining attention in recent years. We examine the effect of Economic Policy Uncertainty (EPU) on the investment policy of a sample of 305 hospitality companies in the U.S. for the period 2001–2018. Applying generalized methods of moments (GMM) technique, we find that investment policies in hospitality companies are negatively affected by EPU. Panel quantile estimations reveal that the effect of EPU on corporate investment is only relevant for companies in the lower quantile of capital expenditures ratio. Our paper also provides policy implications to related parties. •Economic policy uncertainty negatively affects corporate investment.•The effect of EPU is only relevant for companies in the lower quantile of capital expenditures ratio.•That relationship is especially relevant for hospitality firms, which tipically hold not fully reversible projects.•Our results are confirmed when using alternative estimation techniques (GMM and panel quantile methodology).•Managing uncertainty at both political and firm level may reduce the underinvestment problem.