Corporates' strategic responses to economic policy uncertainty in China

Sultan Sikandar Mirza and Tanveer Ahsan
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Sultan Sikandar Mirza: University of Waikato [Hamilton]
Tanveer Ahsan: ESC [Rennes] - ESC Rennes School of Business

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Abstract: Using a novel news‐based index of economic policy uncertainty, this paper studies the impact of economic policy uncertainty on corporate strategic positioning and corporate risk in China from 2009 to 2015. The study also investigates the impact of corporate strategic positioning on corporate risk. The results show that corporate strategic positioning and economic policy uncertainty have a significant positive impact on corporate risk. The results also explain that economic policy uncertainty increases the market risk of the firms irrespective of their corporate strategy. However, it increases the business risk of prospector firms and decreases the business risk of defensive firms. The study may help the firms to formulate and improve their strategic positioning while considering economic policy uncertainty. Our results are robust to alternate proxies of economic policy uncertainty and corporate risk.

Keywords: Chinese firms; corporate risk; economic policy uncertainty; panel data; strategic positioning (search for similar items in EconPapers)
Date: 2020-02
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Citations: View citations in EconPapers (12)

Published in Business Strategy and the Environment, 2020, 29 (2), pp.375-389. ⟨10.1002/bse.2370⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02567142

DOI: 10.1002/bse.2370

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