Does Uncertainty Affect Investment and Labor Demand?
| Contribuinte(s) |
Swedish School of Economics and Business Administration, Department of Finance and Statistics, Finance Svenska handelshögskolan, institutionen för finansiell ekonomi och ekonomisk statistik, finansiell ekonomi |
|---|---|
| Data(s) |
2002
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| Resumo |
This paper analyzes the effect of uncertainty on investment and labor demand for Finnish firms during the time period 1987 – 2000. Utilizing a stock return based measure of uncertainty decomposed into systematic and idiosyncratic components, the results reveal that idiosyncratic uncertainty significantly reduces both investment and labor demand. Idiosyncratic uncertainty seems to influence investment in the current period, whereas the depressing effect on labor demand appears with a one-year lag. The results provide support that the depressing effect of idiosyncratic uncertainty on investment is stronger for small firms in comparison to large firms. Some evidence is reported regarding differential effects of uncertainty on labor demand conditional on firm characteristics. Most importantly, the depressing effect of lagged idiosyncratic uncertainty on labor demand tends to be stronger for diversified firms compared with focused firms. This paper analyzes the effect of uncertainty on investment and labor demand for Finnish firms during the time period 1987 – 2000. Utilizing a stock return based measure of uncertainty decomposed into systematic and idiosyncratic components, the results reveal that idiosyncratic uncertainty significantly reduces both investment and labor demand. Idiosyncratic uncertainty seems to influence investment in the current period, whereas the depressing effect on labor demand appears with a one-year lag. The results provide support that the depressing effect of idiosyncratic uncertainty on investment is stronger for small firms in comparison to large firms. Some evidence is reported regarding differential effects of uncertainty on labor demand conditional on firm characteristics. Most importantly, the depressing effect of lagged idiosyncratic uncertainty on labor demand tends to be stronger for diversified firms compared with focused firms. |
| Formato |
1837 bytes 571634 bytes application/pdf text/plain |
| Identificador |
http://hdl.handle.net/10227/165 URN:ISBN:951-555-735-6 951-555-735-6 0357-4598 |
| Idioma(s) |
en |
| Publicador |
Swedish School of Economics and Business Administration Svenska handelshögskolan |
| Relação |
Working Papers 471 |
| Direitos |
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| Palavras-Chave | #uncertainty #capital expenditures #labor demand #Finance |
| Tipo |
Text |
