The interplay between uncertainty, managerial decision making, and firm value: Evidence from Bangladesh

This paper investigates how uncertainty influences investment and cash-holding decisions and how these nexuses influence the performance of Bangladeshi firms. The results indicate threshold levels of investment and cash holdings up to which investment increases and cash holding de-creases with uncertainty, and both reverse afterward. In other words, the effect of uncertainty on investment and cash holding are inverted U and U-shaped, respectively. The results also imply that the shareholders perceive the impact of these managerial decisions on firms' market value at different levels of uncertainty and depict a nonmonotonous relationship between market value and uncertainty.