The impact of macroeconomic uncertainty on corporate investmentthe case study of vietnam shareholder

UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM ERASMUS UNVERSITY ROTTERDAM INSTITUTE OF SOCIAL STUDIES THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS “THE IMPACT OF MACROECONOMIC UNCERTAINTY ON CORPORATE INVESTMENT” THE CASE STUDY OF VIETNAM BY NGUYỄN NGỌC PHƯƠNG LINH MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, DECEMBER 2017 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS “THE IMPACT OF MACROECONOMIC UNCERTAINTY ON CORPORATE INVESTMENT” THE CASE STUDY OF VIETNAM A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYỄN NGỌC PHƯƠNG LINH CLASS 22 Academic Supervisor: DR NGUYỄN THU HIỀN HO CHI MINH CITY, DECEMBER 2017 ACKNOWLEDGEMENTS To complete the dissertation, I received a lot of attention, help from the school, lecturers, friends and relatives First of all, I would like to express my gratitude to Dr Nguyen Thu Hien, who gave her heartfelt guidance, specific comments and encouragement throughout my thesis’s implemented process Special thank goes to Mr Nguyen Thanh Vinh for his supports in analyzing the data Sincerely I appreciate lecturers teaching Vietnam – the Netherlands programme for M.A in Development Economics who have conveyed valuable knowledge, practical experience for me during the study program Finally, it is pleased to thank my friends and family for their support and encouragement throughout the course of my dissertation Ho Chi Minh City, December 2017 Performer NGUYỄN NGỌC PHƯƠNG LINH i ABSTRACT Employing proxies of macroeconomic uncertainty of Baum et al (2005), I am based on the proposed empirical model of Gulen and Ion (2015) to examine how corporate capital investment is affected by macroeconomic uncertainty for enterprises of Vietnam in the period of 2005 and 2015 My estimates present that the research has strongly explained a negative relationship between the volatility of macroeconomic in real GDP, CPI and the activities of capital expenditures in general as well as mergers and acquisitions in particular More importantly, this effect is significantly stronger for firms with a higher growth rate and non – financial constraints Overall, the study contributes to confirming macroeconomic uncertainty to limit the investment of enterprises and subsequently depress Vietnam economic growth JEL classifications: E20, E22, E44, E60, E63, G30, G32, G34 Key words: corporate investment, mergers and acquisitions, macroeconomic uncertainty, ARCH (GARCH), financial constraints, growth potential ii COMMITMENT I pledge that the contents of this dissertation conducted under the direct guidance of Dr Nguyen Thu Hien All references in the dissertation are clearly quoted in the name of the author, the name of the work, the time and place of publication Any unauthorized copying, violation of training regulations, or fraud, I will take full responsibility Ho Chi Minh City, December 2017 Performer NGUYỄN NGỌC PHƯƠNG LINH TABLE OF CONTENTS ACKNOWLEDGEMENTS .i ABSTRACT ii COMMITMENT iii TABLE OF CONTENTS iv TABLES vi FIGURES AND ILLUSTRATIONS .vii ABBREVIATIONS viii CHAPTER INTRODUCTION 1.1 Background 1.2 Research objectives 1.3 Research objects and scopes .9 1.3.1 Research objects 1.3.2 Research scopes 1.4 Research methodology 1.5 Research significance .10 1.6 Research structure 11 CHAPTER LITERATURE REVIEW 12 2.1 The relationship between macroeconomic uncertainty and investment 12 2.1.1 Macroeconomic uncertainty 12 2.1.2 Corporate investment 14 2.1.3 Factors impacting on the investment of enterprises 15 2.1.4 Impact of macroeconomic uncertainty on corporate investment 17 2.1.5 Robustness check-sub-sample categories 19 2.2 Previous researches 19 2.3 Suggested models and hypotheses 23 CHAPTER RESEARCH METHODOLOGY 25 3.1 Analytical framework .25 3.2 Data 26 3.3 Empirical model 26 3.4 Variable measurement .28 3.4.1 Dependent variable 28 3.4.2 Independent variable 28 3.4.3 Controlling variables 28 3.4.4 Variables for categorizing subsamples 28 3.5 Estimation method 29 CHAPTER RESEARCH RESULTS 31 4.1 Measuring macroeconomic uncertainty 31 4.2 The link between macroeconomic uncertainty and corporate investment 33 4.2.1 Summary statistics 33 4.2.2 Correlation matrix 36 4.2.3 Results for all firms 37 4.2.3.1 MU1 – GDP and corporate investment .38 4.2.3.1.1 MU1 – GDP and capital expenditure proxy 38 4.2.3.1.2 MU1 – GDP and mergers and acquisitions proxy 39 4.2.3.2 MU2 – CPI and corporate investment 41 4.2.3.2.1 MU2 – CPI and capital expenditure proxy 41 4.2.3.2.2 MU2 – CPI and mergers and acquisitions proxy 42 4.2.4 4.3 Results for firms classification 43 4.2.4.1 MU1 – GDP and capital expenditure regarding growth potential .44 4.2.4.2 MU1 – GDP and capital expenditure regarding financial constraints .45 4.2.4.3 MU2 – CPI and capital expenditure regarding growth potential .47 4.2.4.4 MU2 – CPI and capital expenditure regarding financial constraints 48 Discussions .49 CHAPTER CONCLUSIONS 51 5.1 Overview outcomes 51 5.2 Research limitations 54 REFERENCES 55 APPENDICES 58 TABLES Table 2.1: Expectation of the relationship between macroeconomic uncertainty and corporate investment………… 18 Table 4.1: Augmented Dickey – Fuller Unit Root Test for MU proxies 32 Table 4.2: The time series results of variables representing macroeconomic uncertainty 32 Table 4.3: Summary statistics 34 Table 4.4: Correlation matrix .36 Table 4.5: Results of regression model of MU1GDP on CAPEX .39 Table 4.6: Results of regression model of MU1GDP on M&A 40 Table 4.7: Results of regression model of MU2CPI on CAPEX 42 Table 4.8: Results of regression model of MU2CPI on M&A .43 Table 4.9: Impact of MU1GDP on CAPEX regarding growth potential .45 Table 4.10: Impact of MU1GDP on CAPEX regarding financial constraints .46 Table 4.11: Impact of MU2CPI on CAPEX regarding growth potential .47 Table 4.12: Impact of MU2CPI on CAPEX regarding financial constraints .48 FIGURES AND ILLUSTRATIONS Figure 1.1: The criterion of Maastricht Treaty of Vietnam Figure 1.2: Real GDP growth in Vietnam, advanced economies, emerging and developing economies, and the world Figure 1.3: The proportion of inflation and the growth of investment of Vietnam Figure 1.4: Mergers and Acquisitions (M&A) of Vietnam Figure 3.1: Framework of the relationship between macroeconomic uncertainty and corporate investment…… 25 vii ABBREVIATIONS CAPEX Capital Expenditure CAPEXTA Capital Expenditure to Total Assets CAPX Capital Investment CF Cash Flow CFTA Cash Flow to Total Assets CPI Consumer Price Index EU European Union FC Financial Constraints FE Fixed Effect GDP Gross Domestic Product HNX Ha Noi Stock Exchange HOSE Ho Chi Minh Stock Exchange IMF International Monetary Fund MADUMMY Merges and Acquisitions Dummy MU Macroeconomic Uncertainty NFC Non – Financial Constraints OLS Ordinary Least Square PU Policy Uncertainty RE Random Effect SG Sales Growth TA Total Assets TQ Tobin’s Q UK United Kingdom UPCOM Unlisted Public Company Market US United States WTO World Trade Organization viii CHAPTER 5.1 CONCLUSIONS Overview outcomes In order to assess the impact of macroeconomic uncertainty on corporate investment, the study is carried out constructing data set of financial and non – financial enterprises listed on the Ho Chi Minh Stock Exchange (HOSE), Hanoi Stock Exchange (HNX), and Unlisted Public Company Market (UPCOM) in a case of Vietnam during the period of 2005 and 2015 The paper employs panel data regression combined with various empirical models to determine this relationship My study covers the period of 11 years from 2005 to 2015 on the purpose of spanning distinctive events comprising the global crisis by 2008 and the 2006 and 2011 national elections of Vietnam Congress so as to judge the level of impact of macroeconomic volatility and the management of state governance through election Besides, to increase the number of observations with respect to the value of investment, typically capital expenditure and M&A activities, for firms listed on the three stock exchanges, it is needed to spread the research sample as of 2015 As can be stated that macroeconomic uncertainty is manifested at many levels and in many different forms, this also leads to the basis for many variables represent the volatility of macroeconomics In other words, my research develops two new indices of macroeconomic uncertainty which are the real gross domestic product (GDP) and the consumer price index (CPI) by using ARCH (GARCH) model to compute the values of these proxies based on the method of Baum (2005) In association with the regression model of Gulen (2015), the obtained results provide the strongest evidence that an increase in the volatility of macroeconomics leads to a decrease in corporate investment in Vietnam regarding both proxies of macroeconomic uncertainty Through the empirical outcomes of research, the bad impact of macroeconomic volatility on the corporate investment causes to obstruct the investment decision of enterprises and be an evidence supporting the theory of the impact of any macroeconomic stability on corporate financial policy Compared to the previous literatures, this conclusion is consistent with the reality in countries around the world Macroeconomic uncertainty has led to high inflation, current account deficits, low foreign exchange reserves, high foreign debt and budget deficits as well as reduction of consumption growth which are a burden on most small and medium enterprises in Vietnam This led to a decline in investment, to put enterprises at risk, lose large contracts, shrink production and ultimately go bankruptcy In general, the results of the study show that merger and acquisition activity is significantly correlated with macroeconomic uncertainty However, it can be said that the M&A activities have not been substantially affected by the crisis period as it is a relatively new form of investment in Vietnam over the period 2005 to 2015 By 2015, new mergers and acquisitions of large value and volume are emerging, and are dominated by finance, banking, insurance and real estate Therefore, this is a reason why the financial indicators as well as the events of socio – political situation in Vietnam have not had a profound effect on this sector in the research sample M&A is considered to be an ideal concept for future researchers to engage in the analysis so as to clarify more sustainable investment activity related to mergers and acquisitions in a circumstance of Vietnam A further investigation suggests that a high degree of three financial indicators of sales growth, Tobin’s Q and cash flow to total assets ratio is associated with more corporate investment, especially capital expenditure However, it is a few or no evidence for demonstrating the effect of these indicators on M&A activities due to the insignificant magnitude of this sector in Vietnam The empirical results show the statistical significance of the sales growth on capital expenditure for firms in Vietnam It expresses an important condition to help businesses increase investment to expand production in many sectors and spread out the scale of firms, market share, promote business growth and develop not only in the native country but also in the international market In particular, Tobin’s Q generally leads to the positive correlation with capital expenditure as same as the results of past economists This index represents the strength of the stock market, and its high value makes convenient conditions for entrepreneurs to attract capital from investors through the issuance of shares The result is in line with the findings obtained by the original paper that national election has a negative effect on capital investment This implies that the national elections seem to mark the radical change of political and economic views and also create the expectation that will be a significant change in macroeconomic management issues in the economy Hence, that may be the reason why the elections cause much uproar on the investment of enterprises The positive impact is found in the relation between the growth of GDP and corporate investment The outcomes are consistent with the original research that the relationship between investment and GDP growth is moving and transforming Investment and growth often interact in a positive way, meaning that high GDP growth is a high value of investment This conclusion is consistent with Oglietti (2007), Abello (2010) and Villegas – Zermeño (2012) who conduct econometric studies in Argentina and Mexico and demonstrate that Economic Growth is the biggest attraction generating investment In addition, the study finds that the effects of macroeconomic uncertainty in regard to decreasing the value of corporate investment are consistently observed for higher growth potential enterprises and more financially unconstrained enterprises To be more specific, the degree of financial constraints is strongly relying on the size as well as the payout ratio of firms Although the empirical analysis achieved does not demonstrate precisely the influence of this MU1 – GDP on capital expenditure when covering the pattern of growth potential, it is clearly determined this negative relation in the rest cases of MU2 – CPI for two measures of corporate investment These outcomes depict a dynamic picture of the investment behavior of Vietnamese enterprises when confronted with the volatility of macroeconomics To sum up, in the period from 2005 to 2015, the Vietnamese economy has experienced changes in two phases In the period from 2005 – 2007, the economy has not shown much uncertainty, the period 2008 – 2010 has revealed many signs of concern Vietnam's economic situation in this period can be summed up in three phrases comprising low growth, high inflation and instability Apart from the inherent causes of the economy reflected by macroeconomic variables and inappropriate policy adjustments, the causes of macroeconomic uncertainty in Vietnam in these periods are mainly comes from external shocks The economy has started to decline since 2008, but the impact of the global financial crisis was real in 2009, when exports dropped 6.8% and foreign investment halved to just 14,9% compared to the time joining the WTO Although the growth rate was improved in 2010 due to the policy of stimulating demand through increased public investment, the rise in inflation has reduced the purchasing power of the population in the next two years, causing a sharp decrease in consumption Economic growth slowed down in the following years from 2011 to 2015 The impact of macroeconomic uncertainty is a common and unavoidable effect for all businesses because it is cyclical but has different effects for various sized enterprises or different management practices of joint ventures These results of my analysis have clear implications for the conduct of macroeconomic policy of governances in general and corporate decisions of managers in particular in Vietnam Thus, policy makers and entrepreneurs should take into account the conclusions of this research since it is the essential and practical evidence in order to analyze as well as expect the direction and magnitude of macroeconomic volatility on Vietnamese small and medium sized enterprises and then implement the most plausible fiscal and monetary policies as well as the adjustment of management, short term and long term objectives in a plenty of detailed situations of socio – political economy in a nation 5.2 Research limitations In addition to proxies for macroeconomic uncertainty such as GDP and CPI, the paper expects to include additional macro variables for measurement such as IPI, the market return as well as additional independent variables that may affect corporate investments such as fluctuations in interest rates, exchange rate rates, etc Furthermore, consideration of the impact of macroeconomic instability on investment for each industry and sector plays an important role in the application of policies, guidelines and goals for different characteristics of enterprises and industries This research is expected to be a gap for future researchers to access and improve better Eventually, it is necessary to look at the effects of economic volatility during pre and post crisis periods in order to have a clear and concrete view when comparing the results and vulnerabilities that businesses have to bear in order to have strategies and solutions available to anticipate and respond when uncertainty occurs The study expects longer study time and more observations of enterprises to determine the macroeconomic fluctuations in the long period and can contain the economic cycle According to Fred Harrison, an economist in the UK, director of the Land Research Trust, who began warning of the trends in 1997, and in April 2005 he spoke openly with British Prime Minister Tony Blair on the signs of a crisis of uncertainty that the macroeconomic cycle is 18 years and the cycle is broken when there is a world war REFERENCES Abello, Nicolás M "Relación entre inversión extranjera directa y crecimiento económico en Argentina 1970-2008." facultad de Ciencias Económicas (2010) Almeida, Heitor, Murillo Campello, and Michael S Weisbach "The cash flow sensitivity of cash." The Journal of Finance 59.4 (2004): 1777-1804 Almeida, Heitor, and Murillo Campello "Financial constraints, asset tangibility, and corporate investment." The Review of Financial Studies 20.5 (2007): 1429-1460 An, Heng, et al "Political uncertainty and corporate investment: Evidence from China." Journal of Corporate Finance 36 (2016): 174-189 Auerbach, Alan J "Budget windows, sunsets, and fiscal control." Journal of Public Economics 90.1 (2006): 87-100 Azam, Jean‐Paul "Inflation and macroeconomic instability in Madagascar "African Development Review 13.2 (2001): 175-201 Baum, Christopher F., et al "The impact of macroeconomic uncertainty on cash holdings for non-financial firms." (2004) Bleaney, Michael F "Macroeconomic stability, investment and growth in developing countries." Journal of development economics 48.2 (1996): 461-477 Bond, Stephen, et al "Financial factors and investment in Belgium, France, Germany, and the United Kingdom: A comparison using company panel data." The Review of Economics and Statistics 85.1 (2003): 153-165 Chen, Yuhuilin, XiupingHua, and AgyenimBoateng "Effects of foreign acquisitions on financial constraints, productivity and investment in R&D of target firms in China." INTERNATIONAL BUSINESS REVIEW 26.4 (2017): 640-651 CLIPA, Victoria, and Anatol CARAGANCIU "Global crisis: transmission channels to the developing and transition countries." 인인인인인인인인인인인인인인인인인인 (2009): 330-342 Črnigoj, Matjaž, and MiroslavVerbič "Financial constraints and corporate investments during the current financial and economic crisis: The credit crunch and investment decisions of Slovenian firms." Economic systems 38.4 (2014): 502-517 Fazzari, Steven M., et al "Financing constraints and corporate investment." Brookings papers on economic activity 1988.1 (1988): 141-206 Fischer, Stanley "The role of macroeconomic factors in growth." Journal of monetary economics 32.3 (1993): 485-512 Gulen, Huseyin, and Mihai Ion "Policy uncertainty and corporate investment." The Review of Financial Studies 29.3 (2015): 523-564 Haghighi, Hassan Karnameh, MajidSameti, and Rahim DallaliIsfahani "The effect of macroeconomic instability on economic growth in Iran." Research in Applied Economics 4.3 (2012): 39-61 Hall, Bronwyn H., et al "Does cash flow cause investment and R&D?: an exploration using panel data for French, Japanese, and United States scientific firms." (1998) Hasan, Aynul, and Alberto Isgut "Effective coordination of monetary and fiscal policies: conceptual issues and experiences of selected Asia-Pacific countries." A Paper Presented at United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP)’s Regional High-Level Workshop on “Strengthening the Response to the Global Financial Crisis in Asia-Pacific: The Role of Monetary, Fiscal and External Debt Policies (2009) Hausmann, Ricardo, and Michael Gavin "Securing stability and growth in a shock prone region: the policy challenge for Latin America." (1996) Im, Hyun Joong, Heungju Park, and Gege Zhao "Uncertainty and the value of cash holdings." Economics Letters 155 (2017): 43-48 Ismihan, Mustafa, KivilcimMetin-Ozcan, and AysitTansel "Macroeconomic instability, capital accumulation and growth: The case of Turkey 1963-1999." (2002) İsmihan, Mustafa "The Role of Politics and Instability on Public Spending Dynamic and Macroeconomic Performance: Theory and Evidence from Turkey" Diss METU, (2003) Julio, Brandon, and YoungsukYook "Political uncertainty and corporate investment cycles." The Journal of Finance 67.1 (2012): 45-83 Ki, YoungHa, and Tarun Mukherjee "Corporate Cash Holdings and Exposure to Macroeconomic Uncertainty." (2016) Loayza, Norman V., and Claudio Raddatz."The structural determinants of external vulnerability." The World Bank Economic Review 21.3 (2007): 359-387 Maney, Kevin, Steve Hamm, and Jeffrey O'Brien “Making the world work better: the ideas that shaped a century and a company” Pearson Education, (2011) McConnell, John J., and Chris J Muscarella "Corporate capital expenditure decisions and the market value of the firm." Journal of financial economics 14.3 (1985): 399-422 Panagiotidis, Theodore, and PanagiotisPrintzis "Investment Decisions and Macroeconomic Uncertainty: Firm Level Evidence from Greece." (2016) Phan, Hieu V., Nguyen, Hien T., and Sun, Lingna "Shareholder litigation and corporate cash holdings: Evidence from Universal Demand Laws." (2017) Villegas-Zermo, Eddie (2012), "La Relación de Causalidad entre el crecimiento económico de México y la Inversión Extranjera Directa (IED): Un Modelo de Granger." Revista Electrónica de Divulgación de la Investigación, Revista de la Universidad del SABES 04 (2012): 2007-3542 APPENDICES Appendix 1: Definitions of Variables Variable Description CAPEX/TA Ratio of cash flow from investing activities to the total assets CF/TA Net income before extraordinary items plus depreciation expense, all divided by the total assets GDP growth The percentage increase in GDP from one year to the next Growth potential The percentage increase in sales growth from one year to the next MADUMMY MU1 – GDP MU2 – CPI National election Payout ratio Tobin’s Q Sales growth Size Regarding M&A dummies, set to for value and missing value, and otherwise The forecast dispersion for the real GDP The forecast dispersion for the CPI Election dummy equals for election year, and otherwise The value of dividends and common repurchases divided by operating income Market to book value of assets stock The percentage increase in sales growth from one year to the next Natural logarithm of the total assets Appendix 2: Augmented Dickey – Fuller Unit Root Test for real GDP Dickey-Fuller test for unit root Number of obs = 130 Interpolated Dickey-Fuller Test Statistic Z (t) -17.506 1% Critical 5% Critical 10% Value Value Value -3.500 -2.888 -2.578 Critical MacKinnon approximate p-value for Z(t) = 0.0000 (Source: calculations with Stata 14) Appendix 3: Augmented Dickey – Fuller Unit Root Test for CPI Dickey-Fuller test for unit root Number of obs =130 Interpolated Dickey-Fuller Test Statistic Z (t) -5.529 1% Critical 5% Critical 10% Value Value Value -3.500 -2.888 -2.578 MacKinnon approximate p-value for Z(t) = 0.0000 Critical (Source: calculations with Stata 14) Appendix 4: MU1 – GDP and MADUMMY regarding growth potential HIGH GROWTH LOW GROWTH TOTAL SAMPLE (1) MADUMMY -6.560*** (0.000) (2) MADUMMY -5.175* (0.086) (3) MADUMMY -7.448*** (0.000) SG 0.00183 (0.918) -0.0457* (0.060) -0.00999 (0.365) L.TOBINSQ -0.0767 (0.171) -0.00949 (0.949) -0.0470 (0.362) CFTA 0.741 (0.146) 0.781 (0.196) 0.681* (0.073) ELECTION 6.977*** (0.000) 5.125 (0.109) 7.968*** (0.000) L.GDPGROWTH 0.741*** (0.000) 0.513 (0.267) 0.674*** (0.000) _cons 0.419 (0.508) 1.468 (0.346) 1.325** (0.010) 1880 1882 3762 L.MU1GDP N p-values in parentheses * p< 0.1, **p< 0.05, ***p< 0.01 (Source: calculations with Stata 14) Appendix 5: MU1 – GDP and MADUMMY regarding financial constraints NFC BIG SIZE FC SMALL SIZE NFC HIGH PAYOUT RATIO FC LOW PAYOUT RATIO TOTOAL SAMPLE (1) MADUMMY -6.385*** (0.000) (2) MADUMMY -1.469 (0.230) (3) MADUMMY -2.193** (0.011) (4) MADUMMY -9.049*** (0.004) (5) MADUMMY -7.448*** (0.000) SG -0.0122 (0.275) 0.0238 (0.667) 0.00291 (0.894) -0.0298 (0.103) -0.00999 (0.365) L.TOBINSQ 0.0354 (0.684) -0.124 (0.105) -0.0116 (0.841) 0.0205 (0.873) -0.0470 (0.362) CFTA 0.963* (0.095) 0.334 (0.528) 0.992* (0.061) 0.309 (0.649) 0.681* (0.073) ELECTION 6.887*** (0.000) 1.607 (0.248) 2.422** (0.013) 9.775*** (0.003) 7.968*** (0.000) L.GDPGROWTH 0.476** (0.029) 0.567*** (0.003) 0.170 (0.110) 0.610* (0.099) 0.674*** (0.000) _cons 1.813** (0.012) -1.306 (0.334) 1.418*** (0.008) 2.455** (0.025) 1.325** (0.010) 2168 1594 2734 1028 3762 L.MU1GDP N p-values in parentheses * p< 0.1, **p< 0.05, ***p< 0.01 (Source: calculations with Stata 14) Appendix 6: MU2 – CPI and MADUMMY regarding growth potential HIGH GROWTH (1) MADUMMY -0.0374*** (0.000) LOW GROWTH (2) MADUMMY -0.0302* (0.066) TOTAL SAMPLE (3) MADUMMY -0.0602*** (0.000) SG 0.00228 (0.899) -0.0461* (0.059) -0.0100 (0.362) L.TOBINSQ -0.120** (0.028) 0.0333 (0.814) -0.0768 (0.149) CFTA 0.678 (0.175) 0.773 (0.203) 0.658* (0.083) ELECTION -0.258* (0.050) -0.314 (0.155) -0.732*** (0.000) L.GDPGROWTH 0.0291 (0.779) -0.0744 (0.704) 0.431** (0.015) _cons 1.889*** (0.003) 1880 2.442** (0.014) 1882 -0.00164 (0.999) 3762 L.MU2CPI N p-values in parentheses * p< 0.1, **p< 0.05, ***p< 0.01 (Source: calculations with Stata 14) Appendix 7: MU2 – CPI and MADUMMY regarding financial constraints NFC BIG SIZE FC SMALL SIZE NFC HIGH PAYOUT RATIO FC LOW PAYOUT RATIO TOTOAL SAMPLE (1) MADUMMY -0.0442*** (0.000) (2) MADUMMY -0.0399*** (0.000) (3) MADUMMY -0.0438*** (0.000) (4) MADUMMY -0.0537** (0.038) (5) MADUMMY -0.0602*** (0.000) SG -0.0125 (0.259) 0.0199 (0.698) 0.00107 (0.956) -0.0286 (0.119) -0.0100 (0.362) L.TOBINSQ -0.0456 (0.574) -0.147** (0.045) -0.104* (0.090) -0.104 (0.320) -0.0768 (0.149) CFTA 0.919 (0.104) 0.241 (0.642) 1.214** (0.023) 0.242 (0.728) 0.658* (0.083) ELECTION -0.462** (0.015) -0.317* (0.053) -0.327** (0.032) -0.868** (0.020) -0.732*** (0.000) L.GDPGROWTH 0.143 (0.395) -0.0611 (0.597) 0.00593 (0.958) 0.317 (0.364) 0.431** (0.015) _cons 1.356 (0.134) 2.670*** (0.000) 2.143*** (0.001) 0.803 (0.657) -0.00164 (0.999) 2168 1594 2734 1028 3762 L.MU1GDP N p-values in parentheses * p< 0.1, **p< 0.05, ***p< 0.01 (Source: calculations with Stata 14) ... (2015) in the literature of Policy uncertainty and Corporate Investment in conjunction with the model of Baum et al (2005) with the study of the impact of macroeconomic uncertainty on non – financial... investment of Vietnamese enterprises is affected by the macroeconomic uncertainty In other words, the objective of study is to investigate the relationship and impacts of macroeconomic volatility on the. .. to another angle of study to clarify the objective of the study argument leads to the This second hypothesis • Hypothesis 2: There is a strong negative relationship between macroeconomic uncertainty