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- Title
When to go abroad: economic policy uncertainty and Chinese firms' overseas investment.
- Authors
Wu, Ji (George); Zhang, Jian; Wu, Yiwen; Kong, Dongmin
- Abstract
We study how economic policy uncertainty (EPU) influences firms' overseas investments for Chinese listed companies. We find a significant negative relationship between EPU and firms' overseas investments after controlling for firm characteristics and macroeconomic variables. Chinese firms seem to reduce their overseas investments on fixed income securities when facing domestic policy uncertainty. The negative relationship is pronounced for financially constrained firms, firms relying on government subsidies and with low overseas revenues, and SOEs. Firms operating in high marketisation regions can mitigate the negative effect of EPU on firms' overseas investments. Our results remain significant when considering endogeneity problems.
- Subjects
CHINA; ECONOMIC policy; FOREIGN investments; UNCERTAINTY; FIXED-income securities; SUBSIDIES
- Publication
Accounting & Finance, 2020, Vol 60, Issue 2, p1435
- ISSN
0810-5391
- Publication type
Article
- DOI
10.1111/acfi.12474