American International Journal of Research and Innovation

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Economic Policy Uncertainty and Corporate Investment Behavior

Author(s) Prof. Dr. Salawati Sahari
Country United States
Abstract Economic policy uncertainty has become an important factor influencing corporate decision-making, investment strategies, and business performance in increasingly complex global markets. Changes in government policies, regulatory frameworks, taxation systems, trade conditions, and macroeconomic environments can create uncertainty regarding future business conditions. Such uncertainty may affect firms’ willingness to undertake capital investment, expand operations, and commit resources toward long-term projects.
This study examines the relationship between economic policy uncertainty and corporate investment behavior. The research explores how uncertainty conditions influence investment decisions, capital expenditure planning, risk management strategies, and business expansion activities. A conceptual analytical framework supported by simulated observations is developed to evaluate the impact of policy uncertainty on corporate investment patterns.
The findings indicate that higher levels of economic policy uncertainty generally reduce corporate investment willingness by increasing risk perception, delaying investment commitments, and encouraging firms to adopt more cautious financial strategies. However, financially strong firms with effective risk management capabilities demonstrate greater resilience in maintaining investment activities. The study also identifies major challenges including forecasting difficulties, delayed strategic decisions, financing constraints, and reduced investor confidence.
The research contributes to corporate finance and economic policy literature by explaining how uncertainty influences business investment behaviour. The findings provide practical implications for corporate managers, policymakers, investors, and financial analysts seeking to understand investment responses during uncertain economic environments.
Keywords Economic Policy Uncertainty, Corporate Investment, Capital Expenditure, Business Decision-Making, Financial Strategy, Risk Management, Macroeconomic Uncertainty.
Field Engineering
Published In Volume 2, Issue 6, November-December 2020
Published On 2020-11-29

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