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Trade policy uncertainty and firm risk taking

Hui Wang, Huayu Shen, Xiaoyi Tang, Zuofeng Wu and Shuming Ma

Economic Analysis and Policy, 2021, vol. 70, issue C, 351-364

Abstract: Using data for firms listed in China from 2007 to 2019, this paper explores the relationship between trade policy uncertainty (TPU) and firm risk taking (FRT). It finds that TPU is negatively and significantly correlated with FRT. Meanwhile, the influencing mechanism estimates suggest that TPU increases firm financial constraint and operational risk, which, in turn, negatively affect FRT. Further tests reveal that, when the ownership concentration and debt ratio are high, the negative effect of TPU on FRT is more pronounced.

Keywords: Trade policy uncertainty; Risk taking; Financing constraint ownership concentration; Operational risk (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.eap.2021.03.007

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