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Economic Policy Uncertainty and Corporate Innovation - Evidence From China

Author

Listed:
  • Huayu Shen
  • Man Zhang
  • Runxin Liu
  • Fei Hou

    (Qingdao University, China)

Abstract

This study investigates whether economic policy uncertainty affects corporate innovation. Using a sample of Chinese listed firms during the period of 2007-2017, this paper finds that economic policy uncertainty is positively associated with corporate innovation. Moreover, firm-specific characteristics (state ownership, internal control, and managerial ownership) have an influence on the above relationship. Our paper contributes to the economic effects of economic policy uncertainty.

Suggested Citation

  • Huayu Shen & Man Zhang & Runxin Liu & Fei Hou, 2021. "Economic Policy Uncertainty and Corporate Innovation - Evidence From China," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 1(1), pages 1-7.
    • Handle: RePEc:ayb:jrnael:4
    DOI: 2021/06/27
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    References listed on IDEAS

    as
    1. Jian Chen & Fuwei Jiang & Guoshi Tong, 2017. "Economic policy uncertainty in China and stock market expected returns," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(5), pages 1265-1286, December.
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    4. Wu, Hsueh-Liang, 2008. "When does internal governance make firms innovative," Journal of Business Research, Elsevier, vol. 61(2), pages 141-153, February.
    5. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, vol. 112(478), pages 97-116, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    2. Wang, Yonglian & Wang, Lijun & Pan, Changchun & Hong, Songzhi, 2022. "Economic policy uncertainty and price pass-through effect of exchange rate in China," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).
    3. Peng, Daoju & Colak, Gonul & Shen, Jianfu, 2023. "Lean against the wind: The effect of policy uncertainty on a firm's corporate social responsibility strategy," Journal of Corporate Finance, Elsevier, vol. 79(C).
    4. Lei Zheng & Xuemeng Guo & Libin Zhao, 2021. "How Does Transportation Infrastructure Improve Corporate Social Responsibility? Evidence from High-Speed Railway Openings in China," Sustainability, MDPI, vol. 13(11), pages 1-23, June.
    5. Yu, Wei & Yan, Yueyun & Zhu, Keying & Zhang, Peijue, 2024. "Can value-added tax refund policy inhibit corporate financial fraud? Evidence from China," Emerging Markets Review, Elsevier, vol. 63(C).
    6. Huang, Xiaodong & Zhao, Jiayi & Hu, Boqiang & Zhu, Chenzhi, 2025. "Analysis of changes in corporate external guarantee behavior and the role of governance factors under economic policy uncertainty," International Review of Financial Analysis, Elsevier, vol. 97(C).
    7. Rongwu Zhang & Lan Luo & Jianjun Du, 2023. "The influence of fiscal policy uncertainty on corporate total factor productivity: Evidence from Chinese public companies," Contemporary Economic Policy, Western Economic Association International, vol. 41(3), pages 532-554, July.
    8. Safiullah, Md & Kabir, Md. Nurul, 2024. "Corporate political risk and environmental performance," Global Finance Journal, Elsevier, vol. 60(C).
    9. Xue, Xingnan & Hu, Nan, 2023. "Economic policy uncertainty and imitation behaviors of corporate social responsibility practices: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).
    10. Shabir, Mohsin & Jiang, Ping & Hashmi, Shujahat Haider & Bakhsh, Satar, 2022. "Non-linear nexus between economic policy uncertainty and bank lending," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 657-679.
    11. Gao, Wang & Jin, Xiaoman & Zhang, Hongwei & He, Miao, 2025. "The asymmetric response of higher-order moments of precious metals to energy shocks and financial stresses: Evidence from time-frequency connectedness approach," Energy Economics, Elsevier, vol. 142(C).
    12. Shabir, Mohsin & Jiang, Ping & Bakhsh, Satar & Zhao, Zhongxiu, 2021. "Economic policy uncertainty and bank stability: Threshold effect of institutional quality and competition," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    13. Xu, Can, 2023. "Do households react to policy uncertainty by increasing savings?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 770-785.
    14. Chada, Swechha, 2023. "Economic policy uncertainties and institutional ownership in India," The Journal of Economic Asymmetries, Elsevier, vol. 27(C).
    15. Huizheng Liu & Jingyi Zhang & Qi Han & Wenshen Pan & Muhammad Afaq Haider Jafri, 2022. "Impact of Economic Policy Uncertainty on the Stability of Enterprises Embedded in a Global Value Chain," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 12(2), pages 1-3.
    16. Charemza, Wojciech & Makarova, Svetlana & Rybiński, Krzysztof, 2022. "Economic uncertainty and natural language processing; The case of Russia," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 546-562.
    17. Chen Wang & Jack Strauss & Lei Zheng, 2021. "High-Speed Railway Opening and Corporate Fraud," Sustainability, MDPI, vol. 13(23), pages 1-23, December.
    18. Sabani, Nazmie & Bales, Stephan & Burghof, Hans-Peter, 2024. "On the different impact of local and national sources of policy uncertainty on sectoral stock volatility," Research in International Business and Finance, Elsevier, vol. 72(PB).
    19. Xiaojun Yang & Xianyu Yang, 2023. "External parachuting and innovation investment: mediating effect of entrepreneurial spirit," International Entrepreneurship and Management Journal, Springer, vol. 19(4), pages 1643-1671, December.
    20. Chen, Peng & Miao, Xinru & Tee, Kai-Hong, 2023. "Do gold prices respond more to uncertainty shocks at the zero lower bound?," Resources Policy, Elsevier, vol. 86(PA).

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    Keywords

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    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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