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Economic policy uncertainty, corporate diversification, and corporate investment

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  • NETL
  • NSTL
  • Taylor & Francis
This study explores the moderating role of corporate diversification between economic policy uncertainty (EPU) and corporate investment relationship. Using firm-level panel data of US firms over the period 2000-2020, we show that corporate diversification positively moderates the negative impact of EPU on corporate investment by reducing financial constraints. The analysis indicates that diversification mitigates the adverse impact of EPU on US firms' investment. Furthermore, our results are robust to alternative proxies, subsample tests, selection bias, and endogeneity concerns. The findings are helpful from a managerial perspective, suggesting that diversification alleviates financial constraints, enabling firms to- mitigate the negative impact of EPU on investment.

Economic policy uncertaintycorporate investmentcorporate diversificationUS

Zahid Jumah、Zahid Irshad Younas、Mamdouh Abdulaziz Saleh Al-Faryan

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NUST Business School, National University of Sciences and Technology (NUST), Islamabad, Pakistan

Department of Accounting and Financial Management, Faculty of Business and Law, University of Portsmouth||Consultant in Economics and Finance, Riyadh, Saudi Arabia

2023

10.1080/13504851.2022.2106028

Applied economics letters

Applied economics letters

ISSN：1350-4851
年,卷(期)：2023.30(19/21)
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