English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Global: Zendy Plus annual

Presents the access of premium content as premium feature

Premium Content

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the summarisation as premium feature

Summarisation

Insights

Presents the pdf analysis as premium feature

PDF Analysis

Presents the zaia usage as premium feature

ZAIA

Global: Zendy Tools annual

Global: Zendy Free Plan

Global: Zendy Tools monthly

Global: Zendy Plus monthly

We study the response of investment to changes in uncertainty about future profits. We find that in industries dominated by small firms, an increase in uncertainty about future profits depresses investment; in all other industries, increased uncertainty has virtually no effect (or has a positive effect) on investment. The data set from which these findings emerge is a balanced panel, consisting of annual data from 1958 to 1991 for 252 manufacturing industries in the United States. The theoretical work on this topic points to uncertainty about future profit flows as one of the important actors that determines the ease with which firms can access external credit. The prediction made by the theory is that an increase in uncertainty exacerbates informational asymmetries, and hence makes lenders reduce the flow of credit; this in turn lowers investment in credit-constrained firms. If one is willing to accept firm size as a proxy for access to external credit, then our finding that greater uncertainty lowers investment in small-firm-dominated industries is consistent with the theoretical prediction.

Firm Size and the Impact of Profit-Margin Uncertainty on Investment: Do Financing Constraints Play a Role?