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How perceived uncertainty shapes corporate resilience: Evidence from China

Author

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  • Huang, Chengming
  • Mirza, Sultan Sikandar
  • Zhang, Chengwei

Abstract

This study examines how firms respond to shifts in economic policy uncertainty (EPU) by analyzing its impact on firm resilience. Using data from 2660 Chinese A-share listed firms from 2010 to 2022, we find that higher firm-perceived policy uncertainty (FEPU) significantly weakens firm resilience. Drawing on real options and growth options perspectives, the results show that firms become less adaptable when uncertainty leads managers to behave more cautiously and when operational decisions—such as cash reserves and R&D spending—are distorted. Social media pressure, however, softens this negative effect by encouraging greater transparency and discipline. The findings also reveal substantial differences across ownership types, financial conditions, and industry characteristics. The study provides practical insights for managers and policymakers seeking to strengthen organizational resilience in uncertain environments and highlights the need to design governance and communication strategies that help firms remain adaptive when policy risks rise.

Suggested Citation

  • Huang, Chengming & Mirza, Sultan Sikandar & Zhang, Chengwei, 2026. "How perceived uncertainty shapes corporate resilience: Evidence from China," Economic Modelling, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:ecmode:v:157:y:2026:i:c:s026499932600043x
    DOI: 10.1016/j.econmod.2026.107514
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    Keywords

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    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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