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Firm-level investment in the extractive industry from CEE countries: the role of macroeconomic uncertainty and internal conditions

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  • Claudiu Tiberiu Albulescu

    (Politehnica University of Timisoara
    CRIEF, University of Poitiers)

  • Şerban Miclea

    (Politehnica University of Timisoara)

  • Simina Silvana Suciu

    (Politehnica University of Timisoara)

  • Matei Tămăşilă

    (Politehnica University of Timisoara)

Abstract

This paper investigates the impact of external and internal conditions on firms’ investment in CEE countries, applying a panel data analysis, over the time-span 2008–2014. We use AMADEUS statistics for 412 companies and we focus on the extractive industry. The external conditions are associated with the macroeconomic uncertainty related to the economic growth and price level, while for the internal conditions we have retained as explanatory variables the leverage and liquidity ratios. The firms’ investment dynamics is computed as the growth rate of fixed assets. Our results obtained using static and dynamic estimators, show that both external and internal conditions influence the firms’ investment decision. The inflation uncertainty has a positive and significant impact on investment, providing evidence in the favor of the growth-option theory. The liquidity has a positive and significant influence, while the impact of the leverage and economic growth uncertainty is significant only under the dynamic specification. Our results are robust under different specifications of macroeconomic uncertainty and sample structure.

Suggested Citation

  • Claudiu Tiberiu Albulescu & Şerban Miclea & Simina Silvana Suciu & Matei Tămăşilă, 2018. "Firm-level investment in the extractive industry from CEE countries: the role of macroeconomic uncertainty and internal conditions," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 193-208, June.
  • Handle: RePEc:spr:eurasi:v:8:y:2018:i:2:d:10.1007_s40821-017-0079-3
    DOI: 10.1007/s40821-017-0079-3
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