Global Economic Policy Uncertainty and Corporate Investment: Empirical Evidence from Vietnam

Abstract

The Economic Policy Uncertainty Index is an important indicator that influences the corporate financial and investment behavior of companies. In this study, the corporate investment behavior from 2018 to 2020 of 354 non-financial firms listed in Ho Chi Minh Stock Exchange is analyzed to determine how businesses respond to changes in the Global EPU index and to determine how Leverage, Cash flow, Tobin’s Q, Size, and Sales Growth affect business investment. In addition, the research also examined how corporate investment differs between state-owned companies and non-state-owned companies. The data was hand collected and analyzed by Pooled OLS Regression and Fixed-Effect Model through STATA software to determine the relationship between corporate investment and explanatory variables. The results of the study indicate that the correlation between corporate investment and the global EPU index is inversely proportional. This study also proves that the increase of leverage ratio is a factor that helps business investment growth.