Economic policy uncertainty (EPU) measures the ambiguity that government officials introduce into fiscal, regulatory, or monetary policy (Baker, Bloom, and Davis, 2016). EPU is intended to be a comprehensive measure of uncertainty, capturing ambiguity about a firm’s operating environment rather than serving simply as an early indicator of a recession or a weak economy. EPU spikes around close presidential elections, wars, the September 11 attacks, the collapse of Lehman Brothers, and the COVID-19 pandemic.
In our forthcoming paper in The Financial Review, we consider how boards of directors alter their structures to handle exogenous changes in uncertainty. EPU … Read more