Asset price, risk transfer and economic activities: Firm-level evidence from China

Ying Sophie Huang and Yizhong Wang

The North American Journal of Economics and Finance, 2013, vol. 26, issue C, 663-676

Abstract: The paper investigates the extent of the impact from changes in asset price and risk on corporate investment behaviors as well as the real economy. The results support the unidirectional causality effects from asset price fluctuations on the macro-level. By applying quarterly data of Chinese listed companies, we further find the existence of balance sheet effect on the firm-level, which suggests that the changes in asset prices and risk affect the net asset value, and consequently influence corporate investment decisions. More importantly, the balance sheet effect appears to be much more significant after the implementation of new fair value accounting standards in 2007. The impact on the real economy from asset price risk is found to be more prominent as well.

Keywords: Asset price; Balance sheet; Risk transfer (search for similar items in EconPapers)
JEL-codes: D22 E44 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:26:y:2013:i:c:p:663-676

DOI: 10.1016/j.najef.2012.10.008

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