The Moderating Role of Firm Size in the Impact of Global Economic Policy Uncertainty on Firm Value: Evidence from Selective Pricing Theory

Authors

https://doi.org/10.48313/iee.v1i3.65

Abstract

The past two decades have been marked by some of the most turbulent episodes in modern economic history. These crises have disrupted the traditional structure of the global economy by influencing economic policies worldwide, leading to a substantial rise in Global Economic Policy Uncertainty (GEPU). This phenomenon has affected national economies as well as individual firms, ultimately influencing firm value. Accordingly, this study investigates the impact of Global Economic Policy Uncertainty on firm value within the unique economic environment of Iran. Firm value is measured using Tobin’s Q ratio. Furthermore, drawing upon Selective Pricing Theory, the study examines the moderating role of firm size in this relationship. To this end, panel data from 116 companies listed on the Tehran Stock Exchange (TSE) over the period 2005–2023 were analyzed using multivariate panel regression techniques. The findings reveal that Global Economic Policy Uncertainty has a positive and statistically significant effect on firm value. In addition, firm size weakens the positive relationship between Global Economic Policy Uncertainty and firm value. These findings suggest, first, that the Iranian economy demonstrates a relative degree of resilience to global economic policy uncertainty, lending support to the safe-haven hypothesis. Second, they indicate that periods of heightened global economic policy uncertainty may create greater opportunities for firm growth and profitability. Moreover, the results imply that smaller firms may be relatively more resilient during periods of global uncertainty, highlighting the importance of organizational flexibility in times of international crises. The findings provide valuable insights for domestic and foreign investors, financial analysts, corporate managers, and major shareholders involved in corporate governance and strategic decision-making.

Keywords:

Global economic policy uncertainty , Firm value, Firm size, Tobin’s Q, Selective pricing theory

References

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Published

2025-09-20

Issue

Vol. 1 No. 3 (2025): Innovations in Environmental Economics

Section

Articles

How to Cite

The Moderating Role of Firm Size in the Impact of Global Economic Policy Uncertainty on Firm Value: Evidence from Selective Pricing Theory. (2025). Innovations in Environmental Economics , 1(3), 258-270. https://doi.org/10.48313/iee.v1i3.65

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