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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
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

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    2. 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).
    3. Gao, Wang & He, Miao & Zhang, Hongwei, 2025. "Risk connectedness and portfolios between fossil energy, new energy and environmental governance markets," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    4. 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.
    5. Xue, Xingnan & Wang, Liwen & Hu, Nan, 2024. "Economic policy uncertainty and corporate social responsibility disclosure similarity: Evidence from China," The British Accounting Review, Elsevier, vol. 56(5).
    6. 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).
    7. 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).
    8. 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).
    9. 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.
    10. Xu, Can, 2023. "Do households react to policy uncertainty by increasing savings?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 770-785.
    11. 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).
    12. Safiullah, Md & Kabir, Md. Nurul, 2024. "Corporate political risk and environmental performance," Global Finance Journal, Elsevier, vol. 60(C).
    13. Zhang, Bingye & Zhao, Yiwen & Yang, Meng & Liu, Tingzhu, 2025. "Economic policy uncertainty and litigation risk: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 92(C).
    14. 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.
    15. Chen Wang & Jack Strauss & Lei Zheng, 2021. "High-Speed Railway Opening and Corporate Fraud," Sustainability, MDPI, vol. 13(23), pages 1-23, December.
    16. Sun, Guanglin & Ling, Zhencheng & Li, Yanru & Xie, Chang, 2025. "Artificial intelligence and financial fraud," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    17. 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).
    18. 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.
    19. 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).
    20. Li, Jinglong & Dai, Wei, 2025. "The impact of economic policy uncertainty on controlling shareholder tunneling behavior and governance mechanisms," Finance Research Letters, Elsevier, vol. 82(C).
    21. Chada, Swechha, 2023. "Economic policy uncertainties and institutional ownership in India," The Journal of Economic Asymmetries, Elsevier, vol. 27(C).
    22. 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.
    23. 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).
    24. 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.
    25. 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).

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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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