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Investment, uncertainty and irreversibility: evidence from belgian accounting data


  • Danny Cassimon

    () (University of Antwerp, Faculty of Applied Economics)

  • Peter-Jan Engelen

    () (University of Antwerp, Faculty of Applied Economics)

  • Hilde Meersman

    () (University of Antwerp, Faculty of Applied Economics)

  • Martine Van Wouwe

    () (University of Antwerp, Faculty of Applied Economics)


This paper investigates the effects of uncertainty on the investment behaviour using firm-level data for a sample of Belgian manufacturing firms. In general, the results confirm former analysis at the aggregate level, stating that uncertainty does matter but that the sign of the effect and its magnitude largely depend on which proxies are used and how they are defined. It is shown that uncertainty has mainly an impact on the decision to invest and to a much lesser extent on the amount invested. Furthermore, the difference between reversible and irreversible investment is crucial. The impact of volatility on irreversible investment is far more larger than on reversible investment. In some cases, the amount of reversible investment will increase with higher volatility.

Suggested Citation

  • Danny Cassimon & Peter-Jan Engelen & Hilde Meersman & Martine Van Wouwe, 2002. "Investment, uncertainty and irreversibility: evidence from belgian accounting data," Working Paper Research 23, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:200205-4

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    References listed on IDEAS

    1. Chirinko, Robert S, 1993. "Business Fixed Investment Spending: Modeling Strategies, Empirical Results, and Policy Implications," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1875-1911, December.
    2. Robert S. Chirinko, 1992. "Business Fixed Investment Spending: A Critical survey of Modeling Strategies, Empirical Results, and Policy Implications," Working Papers 9213, Harris School of Public Policy Studies, University of Chicago.
    3. Robert S. Pindyck & Andrés Solimano, 1993. "Economic Instability and Aggregate Investment," NBER Chapters,in: NBER Macroeconomics Annual 1993, Volume 8, pages 259-318 National Bureau of Economic Research, Inc.
    4. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
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    Cited by:

    1. Patrick BISCIARI & Alain DURRE & Alain NYSSENS, 2003. "Stock Market Valuation In The United States," Finance 0312011, EconWPA.
    2. Danny Cassimon & Peter-Jan Engelen & Luc Liedekerke, 2016. "When do Firms Invest in Corporate Social Responsibility? A Real Option Framework," Journal of Business Ethics, Springer, vol. 137(1), pages 15-29, August.
    3. Ronald W. Anderson, 2002. "Capital structure, firm liquidity and growth," Working Paper Research 27, National Bank of Belgium.
    4. Meersman, Hilde M.A., 2005. "Port Investments in an Uncertain Environment," Research in Transportation Economics, Elsevier, vol. 13(1), pages 279-298, January.
    5. Geert Langenus, 2006. "Fiscal sustainability indicators and policy design in the face of ageing," Working Paper Research 102, National Bank of Belgium.

    More about this item


    investment; uncertainty; irreversibility;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models


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