The impact of corporate investment strategy on firm profitability moderated by economic policy uncertainty: Evidence from Pakistan

Abstract

This study investigates the impact of corporate investment strategy on firm profitability moderated by economic policy uncertainty. The study's sample includes of 23 non-financial firms, and data were obtained from the website of Pakistan Stock Exchange from 2014 to 2019. The Pooled, Fixed-effect, Random-effect, and Generalized Least Square methods are applied to estimate the quantitative models' estimation results to investigate the impact of economic policy uncertainty on the relationship between investment per total assets, financial leverage on firm performance. The findings of the study indicate that corporate investment strategy and leverage have a significant and positive influence on the firm's profitability. Moreover, the overall moderated regression findings suggest that economic policy uncertainty moderates the relationship between investment strategy and leverage on firm profitability negatively and significantly. These results contribute significant indications for managers and related authorities to manage their investment strategy under economic policy fluctuations.