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Perception of economic policy uncertainty and inefficient investment

Author

Listed:
  • Tian, Zhaoping
  • Wang, Wei
  • Tan, Qing
  • Huang, Xiaolu

Abstract

Using data from A-share listed companies in Shanghai and Shenzhen from 2008 to 2023, this study examines how firm-level perceptions of economic policy uncertainty influence investment inefficiency. Results indicate that perceived EPU reduces inefficient investment, with a pronounced effect on over-investment. This relationship is mediated by increased managerial myopia, which constrains investment inefficiency. Further analysis suggests that this inhibitory effect varies among firms with different governance structures, property rights, financing constraints, and internal control quality.

Suggested Citation

  • Tian, Zhaoping & Wang, Wei & Tan, Qing & Huang, Xiaolu, 2025. "Perception of economic policy uncertainty and inefficient investment," Finance Research Letters, Elsevier, vol. 86(PE).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pe:s1544612325019609
    DOI: 10.1016/j.frl.2025.108706
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