The aquaculture industry has experienced substantial growth for many years. Moreover, high growth rates are projected to continue into the foreseeable future. Compared to other aquaculture species, salmon farming is one of the most capitalintensive seafood industries, requiring substantial investments in working capital, fixed assets, intangible assets (i.e., licenses), and innovation. Meanwhile, this industry is exposed to both production risk and demand uncertainty. Surprisingly, investment behavior in the salmon farming sector has attracted very little research. In this study, we examine how investments in the Norwegian aquaculture sector are affected by macroeconomic and industry-specific uncertainty, cash flows, and leverage. In line with studies in other sectors, we find that cash flows are a significant determinant of investment behavior. However, our results on the relationship between uncertainty and capital formation contrast similar studies on natural resource-based industries.
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