Inventories, sales uncertainty, and financial strength

Mustafa Caglayan, Sara Maioli, Simona Mateut

    Research output: Contribution to journalArticle

    11 Citations (Scopus)

    Abstract

    We investigate the empirical linkages between sales uncertainty and firms’ inventory investment behavior while controlling for firms’ financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of firms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty.
    Original languageEnglish
    Pages (from-to)2512-2521
    JournalJournal of Banking and Finance
    Volume36
    Issue number9
    DOIs
    Publication statusPublished - 1 Sep 2012

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