A Research On The Impact Of Economic Policy Uncertainty On The Company’s R&D Investment

This paper uses the annual data of Chinese A-share listed companies from 2007 to 2017,and studies the relationship between economic policy uncertainty and R&D investment of A-share listed companies in China.Starting from the theory of corporate innovation,this paper applies the theory of information asymmetry and the theory of expectation to analyze the company’s behavior when the external uncertainty increases.This paper finds that the increase of economic policy uncertainty has a positive impact on R&D investment.Then this paper explores its influence channels,and finds that when the uncertainties of economic policies increase,companies will increase retained earnings and reduce bank loans.These two actions reduce the financing costs and risks of companies,and promote R&D investment.This paper argues that companies with different characteristics will make different decisions in the face of high economic policy uncertainty.Economic policy uncertainty has a stronger positive effect on R&D investment of companies with excellent characteristics.This paper named this effect as selection effect.This paper studies the selection effect of economic policy uncertainty,and finds that companies with small financing constraints,non-state-owned nature,belong to protective industries and locating in highly marketizing area have strong selection effect.In addition,this paper also finds that large companies have more choice effect than small and medium-sized companies.