Firm Expectations and Investment: Evidence from the China-Japan Island Dispute
Cheng Chen,
Tatsuro Senga,
Chang Sun and
Hongyong Zhang
Additional contact information
Chang Sun: University of Hong Kong
No 838, Working Papers from Queen Mary University of London, School of Economics and Finance
Abstract:
How do real-time expectations affect firms’ economic decisions? We provide evidence by using a dataset on Japanese multinational firms’ sales forecasts and exploring an unexpected escalation of a territorial dispute between China and Japan in 2012. Our estimation substantiates that, after the escalation of the dispute, affiliates of Japanese multinational firms in China experienced a sharp but temporary decline in total sales relative to affiliates in other countries and a more persistent decline in investment. Moreover, the territorial dispute has led to persistent pessimism in these firms’ expectations about future sales, which can explain 60% of the overall decline in investment.
Keywords: forecasts; pessimistic expectations; geopolitical events; investment (search for similar items in EconPapers)
JEL-codes: D84 E22 E32 F51 (search for similar items in EconPapers)
Date: 2017-10-14
New Economics Papers: this item is included in nep-cna and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
https://www.qmul.ac.uk/sef/media/econ/research/wor ... 017/items/wp838c.pdf (application/pdf)
Related works:
Working Paper: Firm Expectations and Investment: Evidence from the China-Japan Island Dispute (2016) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:qmw:qmwecw:838
Access Statistics for this paper
More papers in Working Papers from Queen Mary University of London, School of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Nicholas Owen ( this e-mail address is bad, please contact ).