The Impact of EPU on the Risk of Corporate Collapse: Conclusions from Chinese A-Share Market

Qian Cao ()
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Qian Cao: The University of Manchester, Alliance Manchester Business School

A chapter in Proceedings of the 2025 International Conference on Financial Risk and Investment Management (ICFRIM 2025), 2025, pp 798-808 from Springer

Abstract: Abstract In the process of business operation, businesses face various threats, including market competition, technological changes, and uncertainty in macroeconomic policies. The emergence of these external threats will affect the expansion of enterprise scale, delay enterprise investment, and increase the potential risk of stock price collapse. Therefore, based on data from the Chinese A-share market, this study explores the impact of economic policy uncertainty (EPU) on the risk of stock price crashes in enterprises, with a particular focus on state-owned and large businesses. Through empirical analysis, EPU significantly increases the risk of bankruptcy faced by enterprises, and this improvement effect is more pronounced in state-owned and large enterprises. The main reason for this is that the importance of state-owned enterprises and large enterprises in the market makes them more susceptible to changes in investor sentiment, and their business decisions are more susceptible to policy changes and changes in investor sentiment. Finally, this article proposes relevant suggestions for investors, corporate managers, and policymakers to reduce unknown risks.

Keywords: Economic Policy Uncertainty; Risk of Stock Price Collapse; Panel regression (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-748-9_88

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DOI: 10.2991/978-94-6463-748-9_88

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