U.K. economic policy uncertainty and innovation activities: A firm-level analysis

Minh Hong Nguyen and Vu Quang Trinh

Journal of Economics and Business, 2023, vol. 123, issue C, No S0148619522000492

Abstract: Our study investigates the effects of economic policy uncertainty (EPU) on firm-level innovation activities. Utilizing the news-based government EPU index of Baker et al. (2016) and a panel sample of 213 UK largest non-financial firms over the period 1999-2018, we find robust evidence that the government EPU has caused a substantial reduction in UK firms’ investment in innovation activities. Moreover, our results further show that such a lower level of corporate investment leads to a decline in their shareholder value, which forms a triangle linkage among EPU, investment and market value.

Keywords: Economic policy uncertainty; Firm investment; UK; Firm value (search for similar items in EconPapers)
JEL-codes: E00 E02 E50 E60 F65 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:123:y:2023:i:c:s0148619522000492

DOI: 10.1016/j.jeconbus.2022.106093

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