A Meta‐Analysis of the Investment‐Uncertainty Relationship

Abstract

In this article we use meta-analysis to investigate the investment-uncertainty relationship. We focus on the direction and statistical significance of empirical estimates. Specifically, we estimate an ordered probit model and transform the estimated coefficients into marginal effects to reflect the changes in the probability of finding a significantly negative estimate, an insignificant estimate, or a significantly positive estimate. Exploratory data analysis shows that there is little empirical evidence for a positive relationship. The regression results suggest that the source of uncertainty, the level of data aggregation, the underlying model specification, and differences between short-and long-run effects are important sources of variation in study outcomes. These findings are, by and large, robust to the introduction of a trend variable to capture publication trends in the literature. The probability of finding a significantly negative relationship is higher in more recently published studies.

Corporate investment during the financial crisis: Evidence from China

“…cash flow). 2 As far as the uncertainty channel is concerned there is considerable controversy but the preponderance of results including meta-studies indicate that the effect of uncertainty on investment is generally negative, compatible with a real options or irreversibility effect (Bernanke, 1983;Dixit & Pindyck, 1994;Driver, Temple, & Urga, 2005;Koetse, de Groot, & Florax, 2009). Given that the financial crisis may have increased uncertainty simultaneously with reducing demand, it seems important to separate out these influences.…”

Which Agglomeration Externalities Matter Most and Why?

“…However, we do include a dummy for working papers, and we control for the year of publication separately from the year of the data, as in Koetse et al . (), to see whether there is no publication bias at all . Finally we already noted that, with respect to specialization, Figure suggested an unusually low frequency of t ‐statistics in the neighbourhood of zero, possibly indicating publication bias.…”

“…(2010) on the effectiveness of active labour market policies and Koetse et al . () on the impact of uncertainty on investment behaviour. However, additionally we run meta‐regressions of reported t ‐statistics, and of the corresponding Fisher's z ‐statistics, on study characteristics.…”

Determinants of firms’ investment behaviour: a multilevel approach

“…Fuss and Vermeulen, 2008;Lensink et al, 2005;Green et al, 2001;Guiso and Parigi, 1999 and see also the literature review by Carruth et al, 2000 and meta-analysis by Koetse et al, 2009). In particular, most evidence on the investment uncertainty relationship in developing countries suggests that uncertainty (as well as irreversibility) has a negative effect on investment.…”