Corporate investment trends in Germany: The role of financialization, intangibles and M&A

Carmen Giovanazzi, Vincent Victor and Dorothee Putscher

No 40, ifso working paper series from University of Duisburg-Essen, Institute for Socioeconomics (ifso)

Abstract: We examine the dynamics of corporate investment in Germany during the 2000s, a period marked by stagnant macroeconomic investment spending. Employing a mixed-methods approach, we explore investment trends across national accounts data, firm-level financials, and responses from financial executives through our financial strategy survey. We show that while tangible investment remains the most important investment category, both macroeconomic and firm-level data indicate a decline. This decrease is offset by rising intangible investment, reflecting the emergence of the intangible economy. Despite this shift, investment has lagged behind rising corporate saving, leading to an increased net lending position. Often interpreted as corporate financialization, we find only moderate and partial evidence to support this view from a firm-level perspective. Additionally, while we find an increasing importance of M&A at the firm level, this development is not fully captured in the national accounts due to missing goodwill data. Our results underscore the necessity of multifaceted analysis in understanding investment dynamics.

Keywords: CFO Survey; Intangible Economy; Investment Strategy; Germany; M&A; Mixed Methods; Financialization (search for similar items in EconPapers)
JEL-codes: C83 D22 E01 E22 G3 L2 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-acc, nep-cfn, nep-eur, nep-fdg and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifsowp:305260

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