The Impact of Macro-Economic Indicators on Corporate Investment Decisions. A Financial Management Approach
Abstract
This study investigates the impact of key macroeconomic indicators - including inflation, interest rates, and economic growth - on corporate investment decisions across three major industries: technology, automotive, and energy. Utilizing quarterly data from 2019 to 2024 and applying econometric techniques such as Vector Autoregression (VAR) and Impulse Response Functions (IRFs), the analysis explores how these macroeconomic shocks influence investment behavior. The results reveal that economic growth above the 3% threshold significantly boosts investment in the automotive sector. Conversely, a 1% increase in interest rates leads to a sharp short-term decline in investment within the technology sector, highlighting its sensitivity to monetary tightening. Additionally, the energy sector exhibits a marked reduction in investment levels when inflation exceeds 5%, reflecting the adverse effects of rising input costs and economic uncertainty. These findings underscore the critical role of macroeconomic conditions in shaping investment strategies, particularly in capital-intensive industries.
References
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[32] Zareeihemat, P., Mohamadi, S., Valipour, J., & Moravvej, S. V. (2025). Forecasting stock market volatility using housing market indicators: A reinforcement learning-based feature selection approach. IEEE Access. DOI: https://doi.org/10.1109/ACCESS.2025.3554224
[2] Abdoh Tabrizi, H., Asadi, B., & Mazaheri, S. (2013). Study of security selection and market timing abilities in mutual funds in Iranian capital market. Financial Research Journal, 15(2): 247-268. DOI:https://doi.org/10.22059/JFR.2013.51080
[3] Aghion, P., Bacchetta, P., Rancière, R., & Rogoff, K. (2009). Exchange rate volatility and productivity growth: The role of financial development. Journal of Monetary Economics, 56(4): 494–513. DOI:https://doi.org/10.1016/j.jmoneco.2009.03.015
[4] Ahmadirad, Z. (2024). The Beneficial Role of Silicon Valley's Technological Innovations and Venture Capital in Strengthening Global Financial Markets. International journal of Modern Achievement in Science, Engineering and Technology, 1(3): 9-17. DOI: https://doi.org/10.63053/ijset.40
[5] Bernanke, B. S., & Gertler, M. (1988). Agency costs, net worth, and business fluctuations. The American Economic Review, 79(1): 14–31. Available at: https://econpapers.repec.org/RePEc:aea:aecrev:v:79:y:1989:i:1:p:14-31
[6] Bernanke, B., Gertler, M., & Gilchrist, S. (1999). The financial accelerator in a quantitative business cycle framework. Handbook of Macroeconomics, 1: 1341–1393. DOI: 10.1016/S1574-0048(99)10034-X
[7] Bloom, N. (2009). The impact of uncertainty shocks. Econometrica, 77(3): 623–685. DOI:https://doi.org/10.3982/ECTA6248
[8] Campello, M., Graham, J. R., & Harvey, C. R. (2010). The real effects of financial constraints: Evidence from a financial crisis. Journal of Financial Economics, 97(3): 470–487. DOI:https://doi.org/10.1016/j.jfineco.2010.02.009
[9] Dib, A. (2010). Banks, credit market frictions, and business cycles (No. 2010-24). Bank of Canada working paper. DOI: https://doi:10.34989/swp-2010-24
[10] Fama, E. F., & Schwert, G. W. (1977). Asset returns and inflation. Journal of Financial Economics, 5(2): 115–146. DOI: https://doi.org/10.1016/0304-405X(77)90014-9
[11] Farooq, U., Ahmed, J., & Khan, S. (2020). Do the macroeconomic factors influence the firm's investment decisions? A generalized method of moments (GMM) approach. International Journal of Finance & Economics, 26(1): 790–801. DOI: https://doi.org/10.1002/ijfe.1820
[12] Fazzari, S. M., Hubbard, R. G., & Petersen, B. C. (1988). Financing constraints and corporate investment. Brookings Papers on Economic Activity, 1988(1): 141–206. DOI: https://DOI 10.3386/w238
[13] Ghalamkari, A. (2024a). Russia and the world system: New regionalism and relations with Iran. Russian Law Journal, 12(1). Available at: https://www.russianlawjournal.org/index.php/journal/article/view/4036
[14] Ghalamkari, A. (2024b). The end of patience: Deviation from the classical context and Janusian construction of China's Middle East policy (Tehran-Riyadh duality). Russian Law Journal, 12(1): 1749-1773. Available at: https://www.russianlawjournal.org/index.php/journal/article/view/4045
[15] Gulen, H., & Ion, M. (2016). Policy uncertainty and corporate investment. Review of Financial Studies, 29(3): 523–564. DOI: https://doi.org/10.1093/rfs/hhv050
[16] Hauzenberger, N., Huber, F., Klieber, K., & Marcellino, M. (2025). Machines learn the macroeconomic effects of financial shocks. Economics Letters, 250, 112260. DOI:https://doi.org/10.1016/j.econlet.2025.112260
[17] Kazemian, S., & Sanusi, Z. M. (2015). Earnings management and ownership structure. Procedia Economics and Finance, 31: 618-624. DOI: https://doi.org/10.1016/S2212-5671(15)01149-1
[18] Keynes, J. M. (1937). The general theory of employment, interest, and money. Palgrave Macmillan. DOI:https://doi.org/10.2307/1882087
[19] Khan, M. K., He, Y., Kaleem, A., Akram, U., & Hussain, Z. (2018). Remedial role of financial development in corporate investment amid financing constraints and agency costs. Journal of Business Economics and Management, 19: 176–191. DOI: https://doi.org/10.3846/16111699.2017.1422797
[20] Love, I. (2003). Financial development and dynamic investment behavior: Evidence from panel VAR. Journal of Money, Credit and Banking, 35(5): 1166–1197. DOI: https://doi.org/10.1016/j.qref.2005.11.007
[21] Oh, G., Kim, S., & Eom, C. (2007). Market efficiency in foreign exchange markets. Physica A: Statistical Mechanics and its Applications, 382(1): 209-212. DOI: https://doi.org/10.1016/j.physa.2007.02.032
[22] Omidi, A., & Ghalamkari, A. (2019). Analysis of the Relationship between Foreign Policy and Economic Development: Comparison of Khatami, Ahmadinejad, and Rouhani Governments (1376-1396). The Islamic Revolution Approach, 13(46): 72-47. Available at: https://www.rahyaftjournal.ir/article_89629.html?lang=en
[23] Omidi, A., & Ghalamkari, A. (2019). The role of development-oriented foreign policy on Turkey's economic progress (2002-2017). International Political Economy Studies, 2(1): 301-332. DOI:https://10.22126/IPES.2019.4016.1118
[24] Salajeghe, S., Montazer, M., Nourollahi, N., Valipour, J., & Mohammadi, M. (2012). Earnings management and companies’ ownership structure in Iran (A Comparison of Earnings Management between companies with institutional investors and companies with individual investors). Journal of Basic and Applied Scientific Research, 2(2): 1728-1734. Available at: https://scholar.google.com/scholar?cluster=4848148751649491734&hl=en&oi=scholarr
[25] Salehipour, M., Najafabadipour, Z., Mohammadi, S., & Shohani, M. (2025). Analysis of the key drivers affecting the development of small and medium sports businesses. SPORT TK-Revista EuroAmericana de Ciencias del Deporte, 14: 3-3. DOI: https://doi.org/10.6018/sportk.644351
[26] Steigum Jr, E. (1983). A financial theory of investment behavior. Econometrica: Journal of the Econometric Society, 637-645. DOI: https://doi.org/10.2307/1912151
[27] Taherinia, M., Matin, M., Valipour, J., Abdolahi, K., Shouryabi, P., & Barzegar, M. M. (2024). Capital Structure Adjustment Speed and Expected Returns: Examination of Information Asymmetry as a Moderating Role. arXiv preprint arXiv:2403.06035. DOI: https://doi.org/10.48550/arXiv.2403.06035
[28] Valipour, J. (2011). The impact of privatization on earnings management in a developing country like Iran. African Journal of Business Management, 5(13), 5179. DOI: https://doi.org/10.5897/AJBM10.1401
[29] Valipour, J. (2024). Investigating the relationship between the quality of management's expected profit and equity. Russian Law Journal, 12(1). Available at: https://www.russianlawjournal.org/index.php/journal/article/view/3994
[30] Valipour, J., Sasani, F., Saberi, M., Dustmohamadloo, H., & Jafari, S. (2023). Designing a model of credit risk management in the network of agents of after-sales service companies Using the financial components of after-sales services and meta-innovative algorithms. Revista Electrónica de Investigación en Ciencias Económicas, 11(22): 208-231. DOI: https://doi.org/10.5377/reice.v11i22.17363
[31] Wang, B., & Zareeihemat, P. (2025). Multi-channel advertising budget allocation: A novel method using Q-learning and mutual learning-based artificial bee colony. Expert Systems with Applications, 126649. DOI:https://doi.org/10.1016/j.eswa.2025.126649
[32] Zareeihemat, P., Mohamadi, S., Valipour, J., & Moravvej, S. V. (2025). Forecasting stock market volatility using housing market indicators: A reinforcement learning-based feature selection approach. IEEE Access. DOI: https://doi.org/10.1109/ACCESS.2025.3554224
Published
2025-06-30
How to Cite
VALIPOUR, Jamal et al.
The Impact of Macro-Economic Indicators on Corporate Investment Decisions. A Financial Management Approach.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 16, n. 2, p. 399-406, june 2025.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/8931>. Date accessed: 07 july 2025.
doi: https://doi.org/10.14505/tpref.v16.2(34).10.
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