Uncertainty Determinants of Firm Investment

Christopher Baum (), Mustafa Caglayan () and Oleksandr Talavera

No 646, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: We investigate the impact of measures of uncertainty on firms' capital investment behavior using a panel of U.S. firms. Increases in firm-specific and CAPM-based measures have a significant negative impact on investment spending, while market-based uncertainty has a positive impact.

Keywords: capital investment; asymmetric information; financial frictions; uncertainty; CAPM (search for similar items in EconPapers)
JEL-codes: E22 D81 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-fmk and nep-mac
Date: 2006-07-28, Revised 2007-02-24
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Published, Economics Letters, 98/3, 282-287, 2008.

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Journal Article: Uncertainty determinants of firm investment (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:646

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