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Uncertainty and Investment: Evidence from Australian Firm Panel Data

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  • Thang Long Tran

Abstract

type="main" xml:id="ecor12133-abs-0001"> This paper investigates the key drivers of fixed firm investment of listed non-financial companies in Australia over the period from 1987 to 2009. A Tobin's q model of investment is augmented to account for the effect of economic uncertainty on the investment decision. The effects of Tobin's q, sales and cash flows on firm investment rate are also analysed and discussed. Consistent with existing literature, this research finds clear evidence of negative effects of both macroeconomic and firm idiosyncratic uncertainty on Australian firm investment. However, evidence also shows that firm-specific uncertainty is more important in explaining firm investment than macroeconomic uncertainty.

Suggested Citation

  • Thang Long Tran, 2014. "Uncertainty and Investment: Evidence from Australian Firm Panel Data," The Economic Record, The Economic Society of Australia, vol. 90, pages 87-101, June.
  • Handle: RePEc:bla:ecorec:v:90:y:2014:i::p:87-101
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    File URL: http://hdl.handle.net/10.1111/ecor.2014.90.issue-s1
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    Cited by:

    1. Angus Moore, 2017. "Measuring Economic Uncertainty and Its Effects," The Economic Record, The Economic Society of Australia, vol. 93(303), pages 550-575, December.
    2. Hamish Burrell & Joaquin Vespignani, 2021. "The Industrial Impact of Economic Uncertainty Shocks in Australia," Economic Papers, The Economic Society of Australia, vol. 40(3), pages 248-271, September.
    3. Andriansyah, Andriansyah, 2017. "The Real Effect of Primary and Secondary Equity Markets on Firm Performance: Evidence from Indonesia," MPRA Paper 116696, University Library of Munich, Germany.
    4. Burrel, Hamish & Vespignani, Joaquin L., 2020. "Industrial Impact of Economic Uncertainty Shocks in Australia: Revised," MPRA Paper 104117, University Library of Munich, Germany.
    5. Chen, Xikai & Le, Cao Hoang Anh & Shan, Yaowen & Taylor, Stephen, 2020. "Australian policy uncertainty and corporate investment," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).

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