published Tuesday, January 7th, 2014

Analysis links governors' speeches, investment

KNOXVILLE, Tenn. — A new study co-authored by a University of Tennessee professor finds that the tone and content of governors' state of the state speeches is linked to the financial investments and jobs created in their states.

Larry Fauver of UT's College of Business Administration, Art Durnev of the University of Iowa and Nandini Gupta of Indiana University analyzed 388 state of the state addresses around the country between 2002 and 2010, and the investment behavior of more than 5,700 companies over the same period.

They found that in the year following a more optimistic speech, businesses invested 2 percent more of their capital than in states where the governors had a more pessimistic outlook.

The authors also noted that some speeches contain uninformative political rhetoric or information already known to investors.

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