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Asset price, risk transfer and economic activities: Firm-level evidence from China

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  • Huang, Ying Sophie
  • Wang, Yizhong
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    Abstract

    The paper investigates the extent of the impact from changes in asset price and risk on corporate investment behaviors as well as the real economy. The results support the unidirectional causality effects from asset price fluctuations on the macro-level. By applying quarterly data of Chinese listed companies, we further find the existence of balance sheet effect on the firm-level, which suggests that the changes in asset prices and risk affect the net asset value, and consequently influence corporate investment decisions. More importantly, the balance sheet effect appears to be much more significant after the implementation of new fair value accounting standards in 2007. The impact on the real economy from asset price risk is found to be more prominent as well.

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    Bibliographic Info

    Article provided by Elsevier in its journal The North American Journal of Economics and Finance.

    Volume (Year): 26 (2013)
    Issue (Month): C ()
    Pages: 663-676

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    Handle: RePEc:eee:ecofin:v:26:y:2013:i:c:p:663-676

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    Web page: http://www.elsevier.com/locate/inca/620163

    Related research

    Keywords: Asset price; Balance sheet; Risk transfer;

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