The Impact of Perceived Expectations and Uncertainty on Firm Investment

Koetse, Mark J.; Vlist, A.J. van der; Groot, H.L.F. de

doi:10.1007/s11187-005-3201-3

Cited by 27 publications

(18 citation statements)

References 25 publications

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“…Earlier studies on uncertainty, related to estimating the effects on investment spending, and using very different datasets and estimation procedures, have found similar results related to firm size: for example, Bianco et al (2012), Loungani (1996, 2000), Ghosal (1991), Koetse and Vlist (2006) and Lensink et al (2005). This is reassuring as it points to our results not being an artifact of our specific dataset, methods of estimation, or construction of uncertainty variables.…”

Section: Discussion Of Results and Implicationssupporting

confidence: 83%

Uncertainty and the employment dynamics of small and large businesses

Ghosal

Yang

2014

Small Bus Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We examine the impact of uncertainty on employment dynamics. Alternative measures of uncertainty are constructed based on the survey of professional forecasters, and regressionbased forecasting models for GDP growth, inflation, S&P500 stock price index, and fuel prices. Our results indicate that greater uncertainty has a negative impact on growth of employment, and the effects are primarily felt by the relatively smaller businesses; the impact on large businesses are generally non-existent or weaker. Our results suggest that to truly understand the effects of uncertainty on employment dynamics, we need to focus on the relatively smaller and entrepreneurial businesses. We discuss implications for the framing of economic policy. Terms of use: Documents in EconStor mayJEL-Code: L110, D800, O300, G100, L400.

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Section: Discussion Of Results and Implicationssupporting

confidence: 83%

Uncertainty and the employment dynamics of small and large businesses

Ghosal

Yang

2014

Small Bus Econ

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“…The results are consistent with Amore and Minichilli (2018), Dejuán and Ghirelli (2018), Ghosal and Loungani (2000) and Kang, Lee and Ratti (2014). According to Drobetz et al (2018) uncertainty distorts the fundamental relation between investment and cost of capital, which is reflected especially in SMEs because these companies have a weaker financial position (Dejuán and Ghirelli, 2018;Ghosal and Loungani, 2000), poorer access to information (Ghosal and Loungani, 2000;Koetse, Van der Vlist and de Groot, 2006), higher risk aversion (Dejuán and Ghirelli, 2018) and less opportunities to hedge against a risk (Koetse, Van der Vlist and de Groot, 2006) compared to large enterprises. The negative impact of electoral uncertainty can also be explained by the fact that SMEs have locally or geographically concentrated production, which increases their susceptibility to possible changes in economic policy (Amore and Minichilli, 2018;Jens, 2017).…”

Section: Electoral Uncertainty and Corporate Investment In Smes And Large Enterprisessupporting

confidence: 76%

Electoral Uncertainty and Corporate Investment: Evidence from European Countries

Mádr¹

2021

ekoncas

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The aim of the paper is to identify whether electoral uncertainty affects corporate investment, which may cause cyclical fluctuations in European countries. More specifically, the paper focuses on the development of a net fixed-asset investment from 2006 to 2015. Electoral uncertainty is associated with the parliamentary election term since this is the most common election type. The paper is focused on 268,000 firms within the secondary sector (NACE Rev. 2 Sections C -F; Amadeus database). The results suggest that electoral uncertainty may have a negative impact on investment in the secondary sector. Comparing individual industries shows that the negative impact may occur in the construction industry, whereas the effect is statistically inconclusive in the case of manufacturing. Considering the size of the enterprises, electoral uncertainty has a greater impact on SMEs, generally in the secondary sector and, more specifically, in construction. Extending the topic of the economic consequences of the political cycle, including the impact of electoral uncertainty on corporate investment across sectors and business sizes, can be considered as the main contribution of the article.

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“…8 Apart from the two different types of investment models, there is substantial variation in the control variables used in the underlying primary studies. Several studies include one or more of the following: wages and capital prices, a time trend, debt position, stock prices, size of a firm, government expenditures, a lagged dependent variable to control for autocorrelation, 6 For empirical analyses on the differential impact of different sources of uncertainty see Huizinga (1993) and Koetse, van der Vlist, and de Groot (2006). 7 See Driver and Moreton (1991) and Ferderer (1993a) for alternative measurements of subjective uncertainty.…”

Section: Control Variables In Primary Modelsmentioning

confidence: 99%

A Meta‐Analysis of the Investment‐Uncertainty Relationship

Koetse

Groot

Florax

2009

Southern Economic Journal

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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.

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The Impact of Perceived Expectations and Uncertainty on Firm Investment

Cited by 27 publications

References 25 publications

Uncertainty and the employment dynamics of small and large businesses

Uncertainty and the employment dynamics of small and large businesses

Electoral Uncertainty and Corporate Investment: Evidence from European Countries

A Meta‐Analysis of the Investment‐Uncertainty Relationship

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