Browse > Article
http://dx.doi.org/10.13106/jafeb.2021.vol8.no5.0001

The Effects of Economic Uncertainty on Multi-National Companies (MNCs) Investment in Malaysia  

MARIADAS, Paul Anthony (Faculty of Business, Accountancy, Communication and Hospitality Management, SEGi University)
MURTHY, Uma (Faculty of Business, Accountancy, Communication and Hospitality Management, SEGi University)
SUBRAMANIAM, Muthaloo (Graduate School of Business, SEGi University)
SELVANATHAN, Mahiswaran (National Higher Education Research Institute (IPPTN), Universiti Sains Malaysia)
LUN, Ng Han (Faculty of Business, Accountancy, Communication and Hospitality Management, SEGi University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.5, 2021 , pp. 1-9 More about this Journal
Abstract
The purpose of this study is to examine the effects of economic uncertainty on MNC investment in Malaysia from 2009 to 2019 by employing an ARDL method. The results revealed that Economic Policy Uncertainty (EPU) has a positive association with the capital expenditures of Nestle, British American Tobacco, and Public Bank in the long run. In a similar period, the Gross Domestic Product (GDP) is positively significant with the capital expenditures of British America Tobacco and Heineken. However, inflation is negatively related to the capital expenditures of British America Tobacco and Heineken. Additionally, the exchange rate has a significant and negative relationship with the capital expenditures of Nestle and Petronas, while the ECT value is negative and significant in the short run, hence confirming that co-integration exists. In view of this, it is imperative that the government plays a prerogative role to support MNC operations, as MNCs foster the developing countries' economic development through facilitating full employment. This study sets to enhance the personal knowledge of those with a strong interest in the Malaysian financial market. As long as MNCs believe that the Malaysian market has the potential to grow, they will continue to invest for the benefit of the country.
Keywords
Economic Uncertainty; Investment; Multi-National Company; Autoregressive Distributed Lag (ARDL);
Citations & Related Records
연도 인용수 순위
  • Reference
1 Chen, P. F., Lee, C. C., & Zeng, J. H. (2019). Economic policy uncertainty and firm investment: evidence from the US market. Applied Economics, 51(31), 3423-3435. https;//doi.org/10.1080/00036846.2019.1581909   DOI
2 Choi, Y., & Yuce, A. (2016). Foreign Direct Investment Projects of Korean Companies. The Journal of Asian Finance, Economics, and Business, 3(1), 5-14. https://doi.org/10.13106/jafeb.2016.vol3.no1.5   DOI
3 Dhingra, S., Ottaviano, G., Sampson, T., & Van Reenen, J. (2016). The impact of Brexit on foreign investment in the UK (Working Paper BREXIT03). Center for Economic Performance. https://cep.lse.ac.uk/pubs/download/brexit03.pdf
4 Dorall, A. (2020). Heineken Malaysia factories no longer considered essential services ordered to close. https://www.therakyatpost.com/2020/04/06/government-announces-rm10-billion-stimulus-package-extension-for-smes/
5 Ferdausy, S., & Rahman, M. S. (2019). Impact of multinational corporations on developing countries. The Chittagong University Journal of Business Administration, 24, 111-137. https://doi.org/10.1080/09638199700000007   DOI
6 Gehlbach, S., & Sonin, K. (2014). Government control of the media. Journal of Public Economics, 118, 163-171. https://doi.org/10.1016/j.jpubeco.2014.06.004   DOI
7 Gilreath, D. (2017). Too much cash on books should be a red flag for investors. https://www.cnbc.com/2017/05/09/too-muchcash-on-books-should-be-a-red-flag-for-investors.html
8 Gujarati, D. N., & Porter, D. C. (2003). Basic econometrics (3rd ed.). Singapore: McGrew Hill Book Co.
9 Hebous, S., & Zimmermann, T. (2020). Can government demand to stimulate private investment? Evidence from US federal procurement (IMF Working Paper WP/16/60). International Monetary Fund. https://www.imf.org/external/pubs/ft/wp/2016/wp1660.pdf
10 Hu, L., Han, J., & Zhang, Q. (2018). The impact of monetary and fiscal policy shocks on stock markets: Evidence from China. Emerging Markets Finance and Trade, 54(8), 1856-1871. https//doi.org/10.1080/1540496X.2018.1425610   DOI
11 Jeanne, O., & Ranciere, R. (2009). The optimal level of international reserves for emerging market countries: A new formula and some applications. Washington, DC: CEPR.
12 Kass, E. M. (2019). How exchange rates affect imports and exports. https://www.americanexpress.com/us/foreign-exchange/articles/how-exchange-rates-affect-imports-and-exports/
13 Kennon, J. (2020). 4 things to look for when buying stock: Answer these questions to understand if you're making a good choice. https://www.thebalance.com/things-to-look-for-ininvestment-356329
14 Lee, J. W., & Wang, Z. (2018). Spillover effects of foreign direct investment inflows and exchange rates on the banking industry in China. Journal of Asian Finance, Economics, and Business, 5(2), 15-24. https://doi.org/10.13106/jafeb.2018.vol5.no2.15   DOI
15 Li, J., & Xia, D. (2019). The optimal investment strategy under the disordered return and random inflation. Systems Science & Control Engineering, 7(3), 82-93. https://doi.org/10.1080/21642583.2019.1661314   DOI
16 Heritage, F. (2020). 2020 Index of economic freedom: Country ranking of Malaysia. Washington DC: Heritage Foundation. https://www.heritage.org/index/country/malaysia
17 McMahon, T. (2017). Effects of inflation on businesses. https://inflationdata.com/articles/2017/06/07/effects-of-inflation-onbusinesses/
18 Moore, W., & Glean, A. (2016). Foreign exchange reserve adequacy and exogenous shocks. Applied Economics, 48(6), 490-501. https://doi.org/10.1080/00036846.2015.1083085   DOI
19 Pesaran, M. H., & Shin, Y. (1995). An autoregressive distributed lag modeling approach to cointegration analysis. In: S. Strom (Ed.), Econometrics and economic theory in the 20th century (pp. 371-413). England: Cambridge University Press. https://doi.org/10.1017/CCOL521633230.011   DOI
20 Nipun, S. (2019). Acceleration theory of investment | economics. http://www.economicsdiscussion.net/investment/accelerationtheory-of-investment-economics/26064
21 Shadkam, E. (2014). FC Approach in Portfolio Selection of Tehran's Stock Market. The Journal of Asian Finance, Economics, and Business, 1(2), 31-37. https://doi.org/10.13106/jafeb.2014.vol1.no2.31   DOI
22 Strycharz, J., Strauss, N., & Trilling, D. (2018). The role of media coverage in explaining stock market fluctuations: Insights for strategic financial communication. International Journal of Strategic Communication, 12(1), 67-85. https://doi.org/10.1080/1553118X.2017.1378220   DOI
23 The World Bank. (2020). Government effectiveness. https://datacatalog.worldbank.org/government-effectiveness-estimate
24 Tirimba, O. I., & Macharia, G. M. (2014). Economic Impact of MNCs on Development of Developing Nations. International Journal of Scientific and Research Publications, 4(9), 1-6.
25 Twine, E. E., Kiiza, B., & Bashaasha, B. (2015). The flexible accelerator model of investment: An application to Ugandan tea-processing firms. African Journal of Agricultural and Resource Economics, 10(1), 1-15. http://www.afjare.org/resources/issues/vol_10_no1/1.Twine%20et%20al.pdf   DOI
26 Baker, S. R., Bloom, N., & Davis, S. J. (2019). Economic policy uncertainty index. Monthly global economic policy uncertainty index. https://www.policyuncertainty.com/index.html
27 Zainudin, M. Z., & Kamarudin, M. F. (2015). Impacts on the implementation of social policy: Comparative study in Malaysia and Indonesia. Asian Social Science, 11(17), 48. https://doi.org/10.5539/ass.v11n17p48   DOI
28 Amar, W., He, L., Li, T., & Magnan, M. (2019). The corrosive effect of offshore financial centers on multinational firms' disclosure strategy. European Accounting Review, 28(3), 483-512. https://doi.org/10.1080/09638180.2018.1497520   DOI
29 Asogwa, B. E., & Ezema, I. J. (2017). Freedom of access to government information in Africa: trends, status, and challenges. Records Management Journal, 27(3), 318-338. https://doi.org/10.1108/RMJ-08-2015-0029   DOI
30 Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. The Quarterly Journal of Economics, 131(4), 1593-1636. https://doi.org/10.1093/qje/qjw024   DOI
31 Bursa Malaysia. (2012). Corporate disclosure guide. https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/assets/5bb54cf85f36ca0c341f0025/Corporate_Disclosure_Guide.pdf
32 Zhang, F., Fei, W., Shen, M., & Jiang, K. (2019). A study on optimal consumption and portfolio with labor income under inflation. Systems Science & Control Engineering, 7(3), 112-121. https://doi.org/10.1080/21642583.2019.1680327   DOI