EconPapers    
Economics at your fingertips  
 

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) Downloads
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 ).

 
Page updated 2024-04-08
Handle: RePEc:qmw:qmwecw:838