ECONOMIC POLICY UNCERTAINTY AND CORPORATE INVESTMENT DECISIONS: EVIDENCE FROM TURKISH MANUFACTURING FIRMS

Authors : Güneş Topçu, Jale Oran

Pages : 328-350

Doi:10.54452/jrb.1671499

View : 134 | Download : 497

Publication Date : 2025-12-12

Article Type : Research Paper

Abstract :The aim of this study is to investigate the short- and long-term impacts of economic policy uncertainty (EPU) on the corporate investment decisions of Turkish manufacturing firms listed on the Borsa Istanbul (BIST). The sample consists of 103 manufacturing firms and the data period is from 2005 Q1 to 2023 Q4. We use the global EPU (GEPU) index to proxy for uncertainty. We use panel data analysis and estimate the regression parameters using both the fixed effects model and the fixed-effect quantile regression model. Our findings indicate a negative and statistically significant impact of GEPU on corporate investment decisions. Moreover, in the long-term, this negative impact persists and continues to hold significant. The findings are in line with the predictions of the real options theory, the assumptions of which are irreversibility and forward-looking nature of investments. When firms experience a positive uncertainty shock in the investment environment, they prefer to postpone their investments or disinvest. Our findings have some major implications. First, companies should incorporate EPU into their investment decisions to time their investment activities. Second, EPU can have persistent and prolonged effects that create fluctuations in corporate investment. Third, companies should consider global economies’ EPU besides local EPU as the empirical results of this study show.
Keywords : Ekonomi politikası belirsizliği, reel opsiyonlar, Oi-Hartman-Abel etkisi, kurumsal yatırım kararları, Türkiye

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