WU, zheng (2008) TEST THE IMPACT OF UNCERTAINTY ON CAPITAL INVESTMENT FOR UK MANUFACTURING COMPANIES. [Dissertation (University of Nottingham only)] (Unpublished)

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This thesis examines the impact of uncertainty on the levels of capital investment for manufacturing companies in UK. It is found from previous empirical studies that conclusions are varied, due to different theories, different forms of models, and employing different uncertainty measures. This study concentrates on the impact of energy (oil) price uncertainty and interest rates uncertainty on capital investment for UK manufacturing firms. Hence, an econometric model is constructed, including these two uncertainty proxy measures, together with Tobin's q, cash flow and lagged investment, to test the impact of uncertainty on capital investment.

Various model specifications have been carried out, and the results show that the fixed effect (LSDV) model is superior to other model specifications. However, the LSDV model suffers from the first and second order autocorrelation. Therefore, the GMM technique need to be applied to deals with the estimates of the coefficients for the explanatory variables.

Moreover, it is also found that both the interest rates uncertainty and the energy (oil) price uncertainty have a negative impact on the levels of capital investment. However, only the impact of oil price uncertainty is significant. Additionally, the positive coefficients for Tobin's q and cash flow on capital investment are to be expected, similar to most previous empirical studies.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 02 Feb 2009
Last Modified: 24 Oct 2016 05:43
URI: http://eprints.nottingham.ac.uk/id/eprint/22384

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