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Economic policy uncertainty and firm’s profitability: the role of logistics infrastructure

Author

Listed:
  • Zahid Jumah
  • Muhammad Moazzam
  • Wajiha Manzoor
  • Nabeel Safdar

Abstract

Purpose - This study investigates the effect of economic policy uncertainty on the firm profitability through moderating role of logistics infrastructure index using US non-financial firms listed at NASDAQ. Design/methodology/approach - We used secondary data set which includes firm-level indicators of 2,323 non-financial US firms listed at NASDAQ over the period of 1998–2018. Ordinary least squares regression with multiple fixed effects used to analyze the data and estimate hypotheses. Findings - The results show that economic policy uncertainty negatively impacts the firm’s profitability whereas the logistics infrastructure positively moderates the negative impact of EPU on the firm’s profitability. Research limitations/implications - Economic policy uncertainty is a significant challenge for managerial decision making and a direct threat to a firm’s profitability. The results of this study imply that the state of logistics infrastructure must be considered as an important policy tool by the senior management to mitigate the negative impact of economic policy uncertainty and to safeguard a firm’s profitability. Originality/value - This study highlights that logistic infrastructure plays an important role in alleviating the adverse effect of economic policy uncertainty on the profitability of a US non-financial firm.

Suggested Citation

  • Zahid Jumah & Muhammad Moazzam & Wajiha Manzoor & Nabeel Safdar, 2024. "Economic policy uncertainty and firm’s profitability: the role of logistics infrastructure," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 74(1), pages 180-202, June.
    • Handle: RePEc:eme:ijppmp:ijppm-08-2023-0410
    DOI: 10.1108/IJPPM-08-2023-0410
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    More about this item

    Keywords

    Telecommunication; Railroads; Air transportation; Economic policy uncertainty; US non-financial firms; Firm equity value; L96; L93; L92; G38; G32;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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