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When to go abroad: economic policy uncertainty and Chinese firms’ overseas investment

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Listed:
  • Ji (George) Wu
  • Jian Zhang
  • Yiwen Wu
  • Dongmin Kong

Abstract

We study how economic policy uncertainty (EPU) influences firms’ overseas investments for Chinese listed companies. We find a significant negative relationship between EPU and firms’ overseas investments after controlling for firm characteristics and macroeconomic variables. Chinese firms seem to reduce their overseas investments on fixed income securities when facing domestic policy uncertainty. The negative relationship is pronounced for financially constrained firms, firms relying on government subsidies and with low overseas revenues, and SOEs. Firms operating in high marketisation regions can mitigate the negative effect of EPU on firms’ overseas investments. Our results remain significant when considering endogeneity problems.

Suggested Citation

  • Ji (George) Wu & Jian Zhang & Yiwen Wu & Dongmin Kong, 2020. "When to go abroad: economic policy uncertainty and Chinese firms’ overseas investment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1435-1470, June.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:2:p:1435-1470
    DOI: 10.1111/acfi.12474
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    7. Gürel, Burak & Kozluca, Mina, 2022. "Chinese investment in Turkey: the Belt and Road Initiative, rising expectations and ground realities," LSE Research Online Documents on Economics 113841, London School of Economics and Political Science, LSE Library.
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