Impact of Uncertainty on Firm Level Investment: Evidence from Pakistan Textile Sector
International Journal of Economics and Empirical Research. 2016, 4(3), 124-132.
9 Pages Posted: 23 Aug 2018
Date Written: 2016
Purpose: This study investigates the relationship between uncertainty and firm’ s level investment by using the data from Pakistani textile sector for period of 2000 to 2013.
Methodology: The data is collected from financial statements of companies and official website of Karachi stock exchange. Uncertainty is divided into three dimensions e.g. firm level uncertainty, market level uncertainty and economic level uncertainty. Uncertainties are measured by volatility of firm’s specific stock returns, volatility of market returns, and exchange rate volatility respectively. The collected data was measured through random effect model.
Findings: The results showed that firm level uncertainty and market level uncertainty are significantly and positively related to firm-level investment, but economic level uncertainty is found negatively related to firm level investment.
Recommendations: The policies should be made for long term to secure firms from macro level uncertainty.
Keywords: Uncertainty, Investment, Random Effect Model
JEL Classification: D92
Suggested Citation: Suggested Citation