Political risk models highlight that political uncertainty matters for corporate investment decisions. However, how political uncertainty matters for investment allocation decisions is relatively under-explored. In this study, we examine the impact of political uncertainty associated with national elections on foreign equity portfolio in 48 countries. Our results indicate that political uncertainty reduces international equity allocations to the host country and such reduction appears more pronounced in the election year. Further analysis shows that the interaction between political uncertainty and institutional quality has a positive and significant effect on international equity portfolio flow, suggesting that the value of institutional quality outweighs the negative effects of political uncertainty. Lastly, we find equity home bias to be negative and significant; however, the interaction between political uncertainty and equity home bias appears insignificant.

政治风险模型强调政治不确定性对企业投资决策很重要。然而，政治不确定性对投资分配决策的影响相对较少。在这项研究中，我们研究了与全国选举相关的政治不确定性对 48 个国家/地区的外国股票投资组合的影响。我们的结果表明，政治不确定性减少了对东道国的国际股权配置，这种减少在选举年显得更加明显。进一步分析表明，政治不确定性和制度质量之间的交互作用对国际股票投资组合流动具有积极且显着的影响，表明制度质量的价值超过政治不确定性的负面影响。最后，我们发现股权家庭偏见是负面的和显着的；然而，政治不确定性和股票本土偏见之间的相互作用似乎微不足道。