Investment, firm-specific uncertainty, and market power in South Africa

Georgios Chortareas*, Emmanouil Noikokyris, Fathima Roshan Rakeeb

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)


We examine the role of firms’ market power in affecting the link between firm-specific uncertainty and corporate investment decisions in a small open economy with a pronounced degree of concentration and mark-ups. Using firm-level data from South African-listed firms, we find that corporate investment of firms with low market power and market share responds positively to idiosyncratic uncertainty. A high degree of market power, however, moderates this positive relationship, allowing for delayed investment under conditions of uncertainty. The results are robust to alternative measures of firm-specific uncertainty and firms’ competitive position. The finding of an association between firms’ market power/market share and their capital budgeting decisions under uncertainty calls for effective competition policies.

Original languageEnglish
Publication statusAccepted/In press - 1 Jan 2020


  • Corporate investment
  • Firm-specific uncertainty
  • Market power
  • Market share
  • Volatility


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