 Regional market uncertainty and corporate investmentJeongseop Song and Fan Zhang The North American Journal of Economics and Finance, 2024, vol. 69, issue PB Abstract: Does the regional market matter for firms’ investment decisions? This study is the first to examine the effect of regional market uncertainty on corporate investment. We use textual analysis of annual financial reports (10-K filings) to construct firm-level exposure to uncertainty from individual states and find that firms significantly reduce investments when their economically relevant regions face higher uncertainty. The negative impacts come from both headquartered states and other relevant states. Notably, we find the effects of regional uncertainty to be stronger for firms with higher investment irreversibility at the regional level as well as firm level. We further demonstrate that the degree of investment reduction under regional uncertainty is greater for financially constrained firms. Overall, the findings of this study suggest that uncertainty in regions of firms’ economic interest is an important component of preventive delays in investment decisions. Keywords: Corporate investment; Regional uncertainty; Location; 10-K filings; Investment irreversibility (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:69:y:2024:i:pb:s1062940823001365 DOI: 10.1016/j.najef.2023.102013 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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