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Firm-level investment in the extractive industry from CEE countries: the role of macroeconomic uncertainty and internal conditions

Claudiu Albulescu (), Şerban Miclea, Simina Silvana Suciu and Matei Tămăşilă
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Şerban Miclea: Politehnica University of Timisoara
Simina Silvana Suciu: Politehnica University of Timisoara
Matei Tămăşilă: Politehnica University of Timisoara

Eurasian Business Review, 2018, vol. 8, issue 2, No 4, 193-208

Abstract: Abstract This paper investigates the impact of external and internal conditions on firms’ investment in CEE countries, applying a panel data analysis, over the time-span 2008–2014. We use AMADEUS statistics for 412 companies and we focus on the extractive industry. The external conditions are associated with the macroeconomic uncertainty related to the economic growth and price level, while for the internal conditions we have retained as explanatory variables the leverage and liquidity ratios. The firms’ investment dynamics is computed as the growth rate of fixed assets. Our results obtained using static and dynamic estimators, show that both external and internal conditions influence the firms’ investment decision. The inflation uncertainty has a positive and significant impact on investment, providing evidence in the favor of the growth-option theory. The liquidity has a positive and significant influence, while the impact of the leverage and economic growth uncertainty is significant only under the dynamic specification. Our results are robust under different specifications of macroeconomic uncertainty and sample structure.

Keywords: Firm investment; Extractive industries; Macroeconomic uncertainty; Leverage; Liquidity; CEE countries (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s40821-017-0079-3

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