La Trobe
1208293_Ashraf,D_2022.pdf (1.6 MB)
Download file

Raising capital amid economic policy uncertainty: an empirical investigation

Download (1.6 MB)
journal contribution
posted on 2023-08-30, 05:21 authored by D Ashraf, Mohsin KhawajaMohsin Khawaja, Ishaq BhattiIshaq Bhatti
This paper investigates how economic policy uncertainty affects firms’ frequency and their choice of financial instruments to raise capital. By applying a three-step sequential framework over a sample of 6834 publicly listed US non-financial firms, we find that during periods of high economic uncertainty, firms raise capital more frequently with a preference toward debt financing. The empirical findings suggest that firms prefer debt financing over equity financing to avoid ownership dilution and high equity premia. The rise in leverage during periods of high economic uncertainty highlights the importance of scrutinizing policy tools used to stabilize the economy during such times.


We appreciate La Trobe University's School of Business for funding Mohsin Khawaja's PhD scholarship.


Publication Date



Financial Innovation





Article Number





Springer Nature



Rights Statement

© The Author(s) 2022. Open Access. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit: