Research On The Impact Of Economic Policy Uncertainty On Corporate Performance

The corporate performance is the main focus of internal operators and external investors.It is also the final goal of the corporate operation.The corporate performance is affected by both the internal corporate governance and also the external operating environment.The economic policies made by the government change the corporate external operating environment and affect the corporate performance.Meanwhile,the economic policy uncertainty increases the risk of corporate external environment which influences the corporate performance.There are few papers studying the influence of the economic policy uncertainty on the corporate performance.Therefore,this paper focuses on the influence of the economic policy uncertainty on the corporate performance and studies the moderating effect different from previous literature.The paper uses the economic policy uncertainty index made by Baker et al(2016)and the data of Chinese listed companies from year 2011 to 2018 to do the empirical research.After rejecting ST,ST* and financial companies,we have the final research sample.The result shows that the increase of the economic policy uncertainty significantly decreases the corporate performance.This paper continues to study the moderating effect of the corporate ownership,the net operating cash flow and the investment expenditure rate.The result shows the state-owned character,higher net operating cash flow and higher investment expenditure rate have a positive moderating effect between the economic policy uncertainty and the corporate performance,which indicates these characters can effectively relieve the negative influence of the economic policy uncertainty.This paper enriches the research on the corporate performance from the perspective of the economic policy uncertainty.After proving that the economic policy uncertainty harms the corporate performance,this paper continues to study the influence of different corporate characters.The result of this paper enlightens both the government and companies.The government should make laws conforming to the current economic background and keep the accuracy and stability of the law and increase the transparency of the law.Corporations should consider both the internal management and the change of external environment in the meantime.They should also make effective strategies to deal with the deterioration of the corporate performance.