Economic policy uncertainty and corporate investment: Evidence from China
Carl R. Chen and
Ying Sophie Huang
Pacific-Basin Finance Journal, 2014, vol. 26, issue C, 227-243
This paper studies how economic policy uncertainty influences corporate investment for Chinese listed companies. We show that when the degree of economic policy uncertainty is higher, firms stand to lower their investment and vice versa. However, firms that have higher return on invested capital, use more internal finance and are not state-owned mitigate the negative effect of policy uncertainty on corporate investment. Moreover, firms in regions with higher degree of marketization are more sensitive to the economic policy uncertainty. The evidence illustrates that keeping the transparency and stability of the implementation of economic policies can improve corporate investment efficiency.
Keywords: Economic uncertainty; Policy uncertainty; Corporate investment; China (search for similar items in EconPapers)
JEL-codes: G32 D80 E22 E60 G18 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:26:y:2014:i:c:p:227-243
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