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Product Market Competition, Corporate Investment, and Firm Value: Scrutinizing the Role of Economic Policy Uncertainty

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  • Oluwaseyi Ebenezer Olalere

    (Graduate School of Business, University of Cape Town, Cape Town 8002, South Africa)

  • Janine Mukuddem-Petersen

    (Graduate School of Business, University of Cape Town, Cape Town 8002, South Africa)

Abstract

This study examines the effects of product market competition on corporate investment and firm value and the moderating role of economic policy uncertainty on this relationship. The firm-level data of 1971 listed corporate firms for BRIC (Brazil, Russia, India, China) countries during 2009–2020 were used, totaling 23,652 observations. Using the GMM estimates, our results depict that product market competition significantly influences corporate investment and firm value in BRIC countries. The result also reveals that economic policy uncertainty plays a significant role in the impact of product market competition on corporate investment and firm value at Brazilian, Russian, Indian, and Chinese firms. The study’s findings contribute to the body of knowledge by providing new evidence on the relationship between PMC, corporate investment, and firm value. These findings are vital for policymakers and regulatory bodies to focus on economic uncertainty in a competitive environment without jeopardizing investment returns in emerging markets.

Suggested Citation

  • Oluwaseyi Ebenezer Olalere & Janine Mukuddem-Petersen, 2023. "Product Market Competition, Corporate Investment, and Firm Value: Scrutinizing the Role of Economic Policy Uncertainty," Economies, MDPI, vol. 11(6), pages 1-18, June.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:6:p:167-:d:1170752
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    References listed on IDEAS

    as
    1. Lubos Pástor & Pietro Veronesi, 2012. "Uncertainty about Government Policy and Stock Prices," Journal of Finance, American Finance Association, vol. 67(4), pages 1219-1264, August.
    2. Abdoh, Hussein & Varela, Oscar, 2017. "Product market competition, idiosyncratic and systematic volatility," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 500-513.
    3. repec:dau:papers:123456789/6271 is not listed on IDEAS
    4. Sheikh, Shahbaz, 2018. "Corporate social responsibility, product market competition, and firm value," Journal of Economics and Business, Elsevier, vol. 98(C), pages 40-55.
    Full references (including those not matched with items on IDEAS)

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