The impact of investment decisions on firm financial performance moderated by economic policy uncertainty: evidence from the manufacturing sector of Pakistan

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

The impact of investment decisions on firm financial performance moderated by economic policy uncertainty: evidence from the manufacturing sector of Pakistan

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

The impact of investment decisions on firm financial performance moderated by economic policy uncertainty: evidence from the manufacturing sector of Pakistan

Popis výsledku anglicky

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.

Druh

J_SC - Článek v periodiku v databázi SCOPUS

CEP obor

—

OECD FORD obor

50206 - Finance

Projekt

—

Návaznosti

S - Specificky vyzkum na vysokych skolach

Rok uplatnění

2022

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Asian Economic and Financial Review

ISSN

2305-2147

e-ISSN

2222-6737

Svazek periodika

12

Číslo periodika v rámci svazku

11

Stát vydavatele periodika

US - Spojené státy americké

Počet stran výsledku

13

Strana od-do

969-981

Kód UT WoS článku

—

EID výsledku v databázi Scopus

2-s2.0-85143873997