Economic policy uncertainty, corporate diversification, and corporate investment

Zahid Jumah, Zahid Irshad Younas, Mamdouh Abdulaziz Saleh Al-Faryan

    Research output: Contribution to journalArticlepeer-review


    This study explores the moderating role of corporate diversification between economic policy uncertainty (EPU) and corporate investment relationship. Using firm-level panel data of US firms over the period 2000–2020, we show that corporate diversification positively moderates the negative impact of EPU on corporate investment by reducing financial constraints. The analysis indicates that diversification mitigates the adverse impact of EPU on US firms’ investment. Furthermore, our results are robust to alternative proxies, subsample tests, selection bias, and endogeneity concerns. The findings are helpful from a managerial perspective, suggesting that diversification alleviates financial constraints, enabling firms to-- mitigate the negative impact of EPU on investment.
    Original languageEnglish
    JournalApplied Economics Letters
    Early online date27 Jul 2022
    Publication statusEarly online - 27 Jul 2022


    • economic policy uncertainty
    • corporate investment
    • corporate diversification
    • US


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