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Inventories and sales uncertainty

  • Mustafa Caglayan
  • Sara Maioli
  • Simona Mateut

We investigate the empirical linkages between sales uncertainty and firms’ inventory investment behavior while controlling for firms’ financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of .rms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty.

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Paper provided by University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM) in its series Discussion Papers with number 11/02.

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Handle: RePEc:not:notcfc:11/02
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  17. Baum, Christopher F. & Caglayan, Mustafa & Talavera, Oleksandr, 2010. "On the investment sensitivity of debt under uncertainty," Economics Letters, Elsevier, vol. 106(1), pages 25-27, January.
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