Investigating the Impact of Economic Policy Uncertainty on Investment Efficiency with Emphasis on the Moderating Role of Financial Constraints and Financialization in Firms Listed on the Tehran Stock Exchange
Keywords:
Economic Policy Uncertainty, Investment Efficiency, Financial Constraints, FinancializationAbstract
This study aims to examine the effect of economic policy uncertainty on corporate investment efficiency and to analyze the moderating roles of financial constraints and corporate financialization in this relationship among firms listed on the Tehran Stock Exchange. The research adopts an applied, descriptive–correlational design using a panel data approach. The statistical population consisted of firms listed on the Tehran Stock Exchange, from which 146 companies were selected over the period 2015–2023, yielding 1,314 firm-year observations. Data were collected from audited financial statements and official disclosure databases. Investment efficiency was considered the dependent variable, economic policy uncertainty the independent variable, and financial constraints and financialization the moderating variables. Hypotheses were tested using panel regression models estimated in EViews, supported by diagnostic tests to ensure model validity and robustness. The results indicate that economic policy uncertainty exerts a negative and statistically significant effect on firms’ investment efficiency. Financial constraints did not demonstrate a significant moderating influence on this relationship. Conversely, corporate financialization exhibited a positive and significant moderating effect, mitigating the adverse impact of economic policy uncertainty on investment efficiency. Economic policy uncertainty reduces firms’ ability to allocate resources efficiently and discourages long-term investment decisions. However, financialization enhances financial flexibility and acts as a buffering mechanism against macroeconomic instability. The findings highlight the importance of policy stability and strategic financial asset management in improving corporate investment efficiency under uncertain economic conditions.
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Copyright (c) 2025 Zahra Khanalizadeh (Author); Najmeh Tavakoli Zaniani (Corresponding author)
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