Election years have paralysing effect on industry

New York

MERGERS and acquisitions (M&A) activity is down. Initial public offerings (IPOs) are practically dead. Companies are cutting spending. The stock market is increasingly volatile. Gross domestic product (GDP) is stalling.

What explains it all? Perhaps Hillary Clinton and Donald Trump.

A growing body of research shows that during presidential election years - particularly ones like this when there is such uncertainty about the nation's future - industry becomes almost paralysed. A look at the last several dozen election cycles shows that during the final year of a presidential term, big corporate investments are routinely postponed, and big deals are put on the back burner.

The research is even more persuasive on the final year of an eight-year presidential term, when a new candidate inevitably will be…