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Trade policy uncertainty and firm risk taking

Author

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  • Wang, Hui
  • Shen, Huayu
  • Tang, Xiaoyi
  • Wu, Zuofeng
  • Ma, Shuming

Abstract

Using data for firms listed in China from 2007 to 2019, this paper explores the relationship between trade policy uncertainty (TPU) and firm risk taking (FRT). It finds that TPU is negatively and significantly correlated with FRT. Meanwhile, the influencing mechanism estimates suggest that TPU increases firm financial constraint and operational risk, which, in turn, negatively affect FRT. Further tests reveal that, when the ownership concentration and debt ratio are high, the negative effect of TPU on FRT is more pronounced.

Suggested Citation

  • Wang, Hui & Shen, Huayu & Tang, Xiaoyi & Wu, Zuofeng & Ma, Shuming, 2021. "Trade policy uncertainty and firm risk taking," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 351-364.
    • Handle: RePEc:eee:ecanpo:v:70:y:2021:i:c:p:351-364
    DOI: 10.1016/j.eap.2021.03.007
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    6. Li, Xiao-Lin & Qiu, Guojing & Ding, Hui, 2022. "The impact of exchange rate policy uncertainty shock on Chinese energy firms' risk-taking," Energy Economics, Elsevier, vol. 105(C).
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