The determinants of Firm Investment were investigated in a study. The sample consists of 170 firms from four different countries. The study found that profitability was a positive determinant of firm investment for Moldova, Romania, Russia, and Serbia firms. Cash holdings were a positive determinant of firm investment in all four countries, but only for Moldova and Serbia. This finding implies that firm size has an effect on managers’ decision to invest more in their companies.
Financial leverage is negatively related to firm investment, especially in underdeveloped countries. While this relationship is most pronounced in firms with low information asymmetry, it is not significant for high-growth firms. This suggests that financial leverage is not a good determinant of firm investment. In this study, the profitability of a firm plays an important role in determining the decision to invest. However, this relationship is only positive for the real estate sector.
In Moldova, firm investment is significantly correlated with profitability. This relationship is positive for firms in the service sector, but negative for those in the real estate sector. This relationship is also present in the real estate sector, where private firms typically finance their investment through debt. The model results show that financial leverage is negatively related to firm investment in underdeveloped countries. It is important to note that financial leverage is a determinant of firm investment but not the only determinant.
Another important determinant of firm investment is the size of the firm. Larger firms are more likely to receive government funding, but this funding is only available to larger firms. Small firms cannot compensate for underdeveloped legal and financial systems. This gap cannot be filled by alternative sources of finance. Even in high-income countries, trade credit is less common. In many cases, government financing is the only way to fund investments for the growth of a firm.
A firm’s profitability is positively related to its ability to attract external capital. It is important to understand the sources of financial funding in its context. This relationship is particularly strong in Moldova, where public firms are more likely to receive government funding than firms in a higher-income country. As a result, the role of private investment in misvaluation-induced investment is critical. The results support this theory. Despite the sensitivity of firm investments to leverage, the effect of leverage is not significant in high-growth firms.
The study results suggest that firm investment is related to financial leverage. In Moldova, the relationship is negative for firms with large debt levels. This relationship is positive for firms in the service sector, but is not significant for firms in the real estate sector. In other words, the more profitable the firm, the more likely it is to invest. The results indicate that there are other factors that are important for the investment decision of a firm. In the United States, the economic growth rate and the availability of trade credit are important for a small-firm’s success.
