Data-Driven Capital Allocation in Manufacturing Firms: An
Investment Analytics Study Using Public Panel Data
Syed Muhammad Mudassir Abbas Naqvi1, Ahmed Usman2,∗
1Department of Economics, Government College University, Faisalabad, Pakistan
2Department of Accounting, Commerce and Economics, Emerson University Multan, Pakistan
Email: muddassireconomist1985@gmail.com; ahmed.usman@eum.edu.pk
Abstract
This paper evolves a business data analytics approach to capital allocation by exploring how the use of public
panel data can aid in estimating, classifying, and profiling strategic firms. The paper examines the claim that
lagged market value, capital stock, and growth signals can explain the current investment behavior and hint
when the investment activity is unusually high using the public-domain Grunfeld investment data, which has
annual observations of major U.S. manufacturing firms. The empirical design is deliberately non-standard as
compared to typical forecasting research and it consists of three analytical layers; fixed-effects panel estimation,
supervised classification of high-investment periods, and firm-level strategic segmentation. The
findings indicate that the growth of lagged investment, lagged capital stock and firm value is highly
correlated with the present level of investment, and that machine-learning classifiers offer helpful
discrimination of high in-vestment periods. Strategic segmentation exercise also indicates the clear profiles
of firms that can be used to prioritize resources and track capital. The value of the paper is two-fold.
First, it illustrates how an old, conventional, public data may be re-used as a new business data analytics
example to support decision-making. Second, it interprets quantitative results into a managerial advice on
capital planning, growth monitoring, and portfolio-style firm evaluation. Accordingly, the paper provides a
reproducible submission-ready study that has a different structure than the traditional business intelligence
forecasting papers and is more in line with the requirements of strategic financial analysis and data-driven
capital allocation.
Keywords: Business data analysis; Capital allocation; panel data; Investment analytics; Classification; Manufacturing
firms