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Economic policy uncertainty and sustainable financial growth: Does business strategy matter?

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  • Ahsan, Tanveer
  • Al-GAMRH, Bakr
  • Mirza, Sultan Sikandar

Abstract

Using a data of 975 Chinese non-financial listed firms, this study investigates the impact of firm business strategy on sustainable financial growth during economic policy uncertainty. We use index-based measures of economic policy uncertainty, sustainable financial growth and business strategy and observe that economic policy uncertainty hurts the sustainable financial growth of Chinese firms. However, we find that a defensive business strategy positively moderates the negative impact of policy uncertainty, whereas an analytical business strategy mitigates the negative impact of policy uncertainty on sustainable financial growth. The results of the study provide guidance to corporations regarding strategy formulation to effectively deal with policy uncertainties. Our results are robust to different proxies of policy uncertainty and endogeneity issues.

Suggested Citation

  • Ahsan, Tanveer & Al-GAMRH, Bakr & Mirza, Sultan Sikandar, 2022. "Economic policy uncertainty and sustainable financial growth: Does business strategy matter?," Finance Research Letters, Elsevier, vol. 46(PB).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321003834
    DOI: 10.1016/j.frl.2021.102381
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    References listed on IDEAS

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    Cited by:

    1. Tanveer Ahsan & Sultan Sikandar Mirza & Ammar Ali Gull & Muhammad Ansar Majeed, 2023. "How to deal with customer and supplier concentration to attain sustainable financial growth? The role of business strategy," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4600-4619, November.
    2. Erli Dan & Jianfei Shen & Yiwei Guo, 2023. "Corporate Sustainable Growth, Carbon Performance, and Voluntary Carbon Information Disclosure: New Panel Data Evidence for Chinese Listed Companies," Sustainability, MDPI, vol. 15(5), pages 1-27, March.
    3. Ren, Xiaohang & Xia, Xixia & Taghizadeh-Hesary, Farhad, 2023. "Uncertainty of uncertainty and corporate green innovation—Evidence from China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 634-647.
    4. Yong Sun & Hui Liu & Jiwei Liu & Mingyu Sun & Qun Li, 2023. "Analysis of Factors Influencing the Corporate Performance of Listed Companies in China’s Agriculture and Forestry Sector Based on a Panel Threshold Model," Sustainability, MDPI, vol. 15(2), pages 1-21, January.

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    More about this item

    Keywords

    Policy uncertainty; Business strategy; Sustainable financial growth; Panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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