External Factors Affecting Investment Decisions of Companies

Abstract

In this paper, we attempt to investigate the importance of certain external factors on the investment decisions made by Polish companies. With the use of data from the tailor-made Survey on Receivables, we (1) examine factors influencing investment decisions of companies in Poland; (2) assess the relation between branch, company size and investment factors; (3) evaluate the importance of the investment factors; and (4) determine the relative influence of these factors on the company-level investment reductions. The results show that first, although the problem of payment delays is the most important single issue determining the investment decisions of Polish companies, its importance decreases when analysed simultaneously with other issues. Second, among the indicators selected for an assessment of investment decisions, two driving forces determine the investment decisions of Polish companiesnamely, macroeconomic factors and law-related factors, with the relative importance of the former lower than the latter. Third, there is a positive association between the importance of each of the two factors and the actual investment reductions, implying that among companies facing higher investment reductions, the importance of macroeconomic and law-related factors is higher. JEL D92 G11 G31

Do the macroeconomic factors influence the firm's investment decisions? A generalized method of moments (GMM) approach

“…The corporate investment that included as dependent variables has been measured as investment in fixed asset (property, plant and equipment) or capital expenditures divided by total assets. This proxy has widely used in prior studies to measure the firm investment (Bialowolski & Bialowolska, 2013; Gulen, 2016; Hamzah, 2017; Onwe & Olarenwaju, 2014; Wuhan & Khurshid, 2015). Similarly, the macroeconomic variables are inflation rate, interest rate, GDP growth rate, foreign direct investment and financial sector development.…”

The Effects of Market and Macroeconomic Uncertainties on Corporate Investment Decisions in Nigeria

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“…The variables in the model described in Equation 2, scaled by the firm's capital stock, were used to account for differences in firm sizes, which, according to Bialowolski and Weziak-Bialowolski (2013), influence corporate investments. Uncertainty constitutes the variable of interest, and the inclusion of market and macroeconomic uncertainties in the model is driven by the theoretical and empirical background, indicating that they affect corporate investment decisions.…”

Causal Relation Between Stock Market Performance and Firm Investment in China: Mediating Role of Information Asymmetry

“…Ağca and Mozumdar (2017) find that internal funds and cash flows are important and significant determinants of firm investment. Bialowolski and Weziak-Bialowolska (2014) conduct a study on Polish companies and found that payment delays and legal and macroeconomic factors considerably affect firm investment decisions. Their study also shows that cash flow sensitivity has a significant negative impact on firm investment at the time of high growth rate options.…”