<p>This paper examines the determinants of firm investment decision. Our study analysed four countries: Moldova, Romania, Russia and Serbia. The sample contains 170 firms for each country for a period of 8 years from 2003 to 2010. Using the data panels method, the empirical results indicate that profitability positively and significantly influences the firm investments for the markets of Moldova and Romania under two alternatives, and for the other countries under one specification. However, the positive effect of cash holdings is only observed for the firms of Moldova and Serbia. Furthermore, the higher the size of the firms of all countries is, the more the managers are encouraged to invest more. Finally, the sensitivity analysis of our models on activity sectors, shows differences in the factors explaining the investment decision for the market of Moldova. Indeed, profitability significantly and positively explains firm investment for the service and real estate sectors. This result is found for other countries for two sectors. In contrast, for country Russia, an increase in the profitability for mining and agriculture firms, does not stimulate managers to invest more.</p>
Empirical analysis of debt maturity, cash holdings and firm investment in developing economies
