Managerial Response to Macroeconomic Uncertainty: Implications for Firm Profitability

• 成果类型: Article
• 署名作者: Binz, Oliver
• 署名单位: INSEAD Business School
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0342
• 发表日期: 2022
• 页码: 89-117
• 关键词: real options; INVESTMENT; earnings; MARKET; volatility; shocks; accruals; industry; analysts; COSTS

摘要

This paper examines how agents' response to macroeconomic uncertainty affects firms' revenues, expenses, and profitability in a global sample of firms spanning 1997 to 2018. Consistent with consumers reducing purchases and managers cutting costs, I find that increases in macroeconomic uncertainty lead to both lower revenues and lower expenses. The net short-term effect on profitability is positive as the reduction in expenses exceeds the fall in revenues. This favorable profitability effect is attenuated for firms whose institutional environment restrains cost-cutting, holds for both the cash and accrual components of earnings, and is robust to instrumental variable estimation employing exogenous variation in macroeconomic uncertainty arising from natural disasters, political unrest, revolutions, and terrorist attacks.