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Is size important for the investment-uncertainty relationship? : an empirical analyses for Dutch firms

  • Lensink, Robert
  • Steen, Paul van
  • Sterken, Elmer

    (Groningen University)

Abstract By using data from a survey amongst a panel of Dutch firms we investigate whether the investment-uncertainty relationship depends on the size of the firm. We find that uncertainty has a positive effect on investment of small firms, whereas it is negative for large firms. There are probably two reasons for this outcome. First, both small and large Dutch firms do not seem to be financially constrained. Second, sunk costs are much higher for large than for small Dutch firms.

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File URL: http://irs.ub.rug.nl/ppn/240329236
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Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 00E03.

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Date of creation: 2000
Date of revision:
Handle: RePEc:dgr:rugsom:00e03
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  1. Peeters, Marga, 1997. "Does demand and price uncertainty affect Belgian and Spanish corporate investment?," MPRA Paper 23604, University Library of Munich, Germany.
  2. Robert S. Pindyck & Andres Solimano, 1993. "Economic Instability and Aggregate Investment," NBER Working Papers 4380, National Bureau of Economic Research, Inc.
  3. John V. Leahy & Toni M. Whited, 1995. "The Effect of Uncertainty on Investment: Some Stylized Facts," NBER Working Papers 4986, National Bureau of Economic Research, Inc.
  4. Pindyck, Robert, 1989. "Irreversibility, uncertainty, and investment," Policy Research Working Paper Series 294, The World Bank.
  5. Abel, Andrew B, 1983. "Optimal Investment under Uncertainty," American Economic Review, American Economic Association, vol. 73(1), pages 228-33, March.
  6. Simon Price, . "Aggregate uncertainty, investment and asymmetric adjustment in the UK manufacturing sector," Economics Discussion Papers 441, University of Essex, Department of Economics.
  7. Catherine Pattillo, 1998. "Investment, Uncertainty, and Irreversibility in Ghana," IMF Staff Papers, Palgrave Macmillan, vol. 45(3), pages 522-553, September.
  8. Ferderer, J Peter, 1993. "The Impact of Uncertainty on Aggregate Investment Spending: An Empirical Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(1), pages 30-48, February.
  9. McDonald, Robert & Siegel, Daniel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, MIT Press, vol. 101(4), pages 707-27, November.
  10. Hartman, Richard, 1972. "The effects of price and cost uncertainty on investment," Journal of Economic Theory, Elsevier, vol. 5(2), pages 258-266, October.
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