Economic Policy Uncertainty and Corporate Investment Efficiency: Evidence from Australian Energy Companies

Nga Trinh
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Nga Trinh: Department of Finance and Banking, School of Economics, Finance and Accounting, International University-Vietnam National University Ho Chi Minh City, Ho Chi Minh City, Vietnam

International Journal of Energy Economics and Policy, 2024, vol. 14, issue 1, 53-60

Abstract: This study examines the impact of Economic Policy Uncertainty (EPU) on corporate investment efficiency. I argue that EPU increases financing constraints or induces firms to postpone investment projects, thereby reducing their investment efficiency. Using a data set of Australian energy firms from 2010 to 2022 and the EPU index of Australia, the findings show that the EPU index has a significant and negative effect on corporate investment efficiency. The results hold in fixed-effects and dynamic GMM models and after control for firm-specific factors, suggesting that a macroeconomic factor like the EPU index also plays an important role in determining the efficiency of Australian energy companies’ investments.

Keywords: Economic Policy Uncertainty; Corporate Investment Efficiency; Energy Company; Australia (search for similar items in EconPapers)
JEL-codes: E60 G31 G32 Q43 (search for similar items in EconPapers)
Date: 2024
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