Journal
PACIFIC-BASIN FINANCE JOURNAL
Volume 26, Issue -, Pages 227-243Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.pacfin.2013.12.008
Keywords
Economic uncertainty; Policy uncertainty; Corporate investment; China
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This paper studies how economic policy uncertainty influences corporate investment for Chinese listed companies. We show that when the degree of economic policy uncertainty is higher, firms stand to lower their investment and vice versa. However, firms that have higher return on invested capital, use more internal finance and are not state-owned mitigate the negative effect of policy uncertainty on corporate investment. Moreover, firms in regions with higher degree of marketization are more sensitive to the economic policy uncertainty. The evidence illustrates that keeping the transparency and stability of the implementation of economic policies can improve corporate investment efficiency. (C) 2014 Elsevier B.V. All rights reserved.
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