Economic policy uncertainty nexus with corporate risk-taking: The role of state ownership and corruption expenditure

Weike Zhang, Xueyuan Zhang, Xiaoli Tian and Fengwei Sun

Pacific-Basin Finance Journal, 2021, vol. 65, issue C

Abstract: This study investigates the role of state ownership and corruption expenditure in the relationship between economic policy uncertainty (EPU) and corporate risk-taking. The finding shows that EPU is significantly positively correlated with corporate risk-taking in China. The state ownership affects the link between EPU and corporate risk-taking, and SOEs are more willing to avoid risks in response to the increases of EPU. Corruption expenditure positively affects the relationship between EPU and corporate risk-taking. Compared with SOEs, non-SOEs have more incentive to respond to an increase of EPU through corruption expenditure. Moreover, China's anti-corruption campaign strongly affects the above effects. Our results are robust to alternative variable measures and endogeneity tests.

Keywords: Economic policy uncertainty (EPU); Corporate risk-taking; State ownership; Corruption expenditure; Anti-corruption campaign (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:65:y:2021:i:c:s0927538x21000032

DOI: 10.1016/j.pacfin.2021.101496

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