Inventories and sales uncertainty

Mustafa Caglayan (), Sara Maioli and Simona Mateut

No 2011003, Working Papers from The University of Sheffield, Department of Economics

Abstract: We investigate the empirical linkages between sales uncertainty and firms' inventory investment behavior while controlling for firms' financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of firms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty.

Keywords: inventory investment; uncertainty; financial constraints (search for similar items in EconPapers)
JEL-codes: D81 D92 F14 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011-02, Revised 2011-02
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.shef.ac.uk/economics/research/serps/articles/2011_003.html First version, 2011 (application/pdf)

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Working Paper: Inventories and sales uncertainty (2011)
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