The impact of investment decisions on firm financial performance moderated by economic policy uncertainty: evidence from the manufacturing sector of Pakistan
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F70883521%3A28120%2F22%3A63550998" target="_blank" >RIV/70883521:28120/22:63550998 - isvavai.cz</a>
Result on the web
<a href="https://archive.aessweb.com/index.php/5002/article/view/4660" target="_blank" >https://archive.aessweb.com/index.php/5002/article/view/4660</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.55493/5002.v12i11.4660" target="_blank" >10.55493/5002.v12i11.4660</a>
Alternative languages
Result language
angličtina
Original language name
The impact of investment decisions on firm financial performance moderated by economic policy uncertainty: evidence from the manufacturing sector of Pakistan
Original language description
The study examines the link between firm-level investment and firm performance moderated by economic policy uncertainty in the manufacturing sector of Pakistan across the six years from 2015–2020. The System-GMM estimation has been employed to demonstrate the problem of endogeneity with dynamic linear and non-linear models. The study revealed that the moderating impact of economic policy uncertainty has negative and significant impact on investment (investment in tangible assets, investment in intangible assets, and financial leverage) and firm performance (Tobin’s Q). Similarly, economic policy uncertainty regarding investment and firm performance (ROA) is negative and significant in investment in tangible assets, but positive and significant in financial leverage. Our findings remain constant over a range of variable characteristics, even after accounting for endogeneity issues. Our main contribution is the finding that investment and firm performance have a negative and significant relationship with economic policy uncertainty. As economic policy uncertainty raises the firm level, investment decreases, which ultimately impacts firm performance negatively. Thus, the study advises that policymakers make an effort to minimize the effect of economic policy uncertainty at a certain level. They must keep this uncertainty within a reasonable range since increased economic policy uncertainty will push businesses to minimize their short-term and long-term investments.
Czech name
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Czech description
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Classification
Type
J<sub>SC</sub> - Article in a specialist periodical, which is included in the SCOPUS database
CEP classification
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OECD FORD branch
50206 - Finance
Result continuities
Project
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Continuities
S - Specificky vyzkum na vysokych skolach
Others
Publication year
2022
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Name of the periodical
Asian Economic and Financial Review
ISSN
2305-2147
e-ISSN
2222-6737
Volume of the periodical
12
Issue of the periodical within the volume
11
Country of publishing house
US - UNITED STATES
Number of pages
13
Pages from-to
969-981
UT code for WoS article
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EID of the result in the Scopus database
2-s2.0-85143873997