Inventories and sales uncertainty

Mustafa Caglayan (), Sara Maioli and Simona Mateut

Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)

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 .rms. 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)
Date: 2011-02
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Working Paper: Inventories and sales uncertainty (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcfc:11/02

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