Title: The moderating role of economic uncertainty via corruption on investment: evidence from European firm level

Authors: Sagi Akron; Ender Demir; José María Díez-Esteban; Conrado Diego García-Gómez

Addresses: The School of Business Administration, The Faculty of Social Sciences, University of Haifa, Haifa, Israel ' Department of Business Administration, School of Social Sciences, Reykjavik University, Reykjavik, Iceland ' Department of Economics and Business Administration, University of Burgos, Burgos, Castilla y Leon, Spain ' Department of Financial Economics and Accounting, University of Valladolid - Duques de Soria Campus, Soria, Spain

Abstract: This paper uniquely examines the moderation effect of economic uncertainty via corruption's impact on the firm level investment. By using a sample of firms from 30 countries in Europe for the period 2011-2020, we first observe a direct negative effect of either economic uncertainty or corruption on firms' capital expenditures. More importantly, we crucially find a positive moderation effect of uncertainty on corruption, amplifying corruption's impact on the corporate investment. The findings, robust to country, industry and time fixed-effects, shed important light on the East-Asian countries growth puzzle.

Keywords: uncertainty; corruption; moderation; corporate investment; world uncertainty index.

DOI: 10.1504/EJIM.2024.135936

European Journal of International Management, 2024 Vol.22 No.2, pp.230 - 253

Received: 03 Oct 2021
Accepted: 08 Feb 2022
Published online: 10 Jan 2024 *

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