Uncertainty, corporate investment, and hiring: The case of COVID-19

• COVID-19 raised self-assessed firm-level uncertainty regarding planning forecasts. • This increase in firm-level uncertainty decreases investment and hiring plans. • Spending declines persist even after controlling for other COVID-19 factors and corporate flexibility. • Data come from surveys of the same CFOs, conducted before and during the pandemic. We investigate how the COVID-19 pandemic affected CFOs’ self-assessed uncertainty about revenue growth and its impact on investment and hiring plans, using data from two consecutive surveys of the same CFOs conducted before and during the pandemic. Following the WHO's declaration, firm-level uncertainty increased, and investment plans were restrained. Furthermore, heightened firm-level uncertainty dampened firms' investment and hiring plans, even after controlling for other pandemic-related factors, as well as financial and investment flexibility.