Economic policy uncertainty and firm’s cash holding in China: The key role of asset reversibility

Liu, Yuanyuan; Li, Jing; Liu, Guanchun

doi:10.1016/j.asieco.2021.101318

Cited by 33 publications

(21 citation statements)

References 32 publications

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“…Previous studies have confirmed that the external issue of economic policy uncertainty has a significant impact on the internal activities of enterprises [12]. For example, Li et al took the A-share listed companies from the 2002 to 2013 as example [58], and empirical research found that economic policy uncertainty has an inhibitory effect on corporate investment.…”

Section: Discussionmentioning

confidence: 99%

“…In this sense, governments have established a new type of political relationship with companies and stakeholders in civil society, to promote socially responsible and sustainable business practices [10]. There is widespread uncertainty in economic activities [11], and how economic policy uncertainty(EPU) affects macroeconomic activity has been widely analyzed in the theoretical research [12]. For example, some scholars subdivide economic policy uncertainty into fiscal policy uncertainty, monetary policy uncertainty, and trade policy uncertainty [13].…”

Section: Introductionmentioning

confidence: 99%

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The impact of economic policy uncertainty on corporate social responsibility: A new evidence from food industry in China

Song

Shang

et al. 2022

PLoS ONE

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The ability of the food industry to practice a high degree of corporate social responsibility is related to whether national food safety can be effectively guaranteed. By taking the food enterprises in China’s A-share listed companies from 2009–2018, this paper probes into the influence of China’s macroeconomic policy uncertainty on corporate social responsibility, and depicts the differencent impact of enterprise’s practice of social responsibility under government association and market association, respectively. The results firstly show that, the uncertainty of economic policy has a negative effect on the social responsibility of food enterprises, with a regression coefficient of -0.013. Secondly, nonstate-owned enterprises are more vulnerable to macroeconomic fluctuations in the practice of social responsibility. Thirdly, in the case of greater economic policy uncertainty, enterprises with stronger market connections in the food industry tend to be more conservative in their CSR. The above research results not only verify the path of transmission of economic policy uncertainty to corporate social responsibility, but also provide important ideas and references for improving the level of corporate social responsibility in the food industry and ensuring food safety.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The impact of economic policy uncertainty on corporate social responsibility: A new evidence from food industry in China

Song

Shang

et al. 2022

PLoS ONE

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“…When the government adopts tight financial supervision policies, the firms would have more difficulty obtaining loans from banks, bringing huge financial stress to the strategic investment of firms [60]. As an external risk, the uncertainty of economic policy causes difficulty for firms to predict the future behaviors of the government without clear policies by the state and government, and firms often choose conservative behaviors and hold more cash flow and will not try innovative strategies easily [40,41]. According to the results of this study, the government should make clear the policy of green innovation and circular supply chain, so that firms can clarify the policy direction of the government, stand on the firm level, pay attention to changes in economic policies, and make plans to deal with all changes when improving the circular supply chain through green innovation.…”

Section: Discussionmentioning

confidence: 99%

“…As an external risk, the uncertainty of economic policy leads to difficulty for firms to form a stable and consistent pre-judgment of their financial situation and external environment. Firms have to choose to hold more cash flows, which makes them afraid to try innovative strategies easily [40]. The increased uncertainty of economic policy will lead to a reduction in investment, bond issuance and expenditure, and stagnation of R&D and innovation strategies of new products.…”

Section: The Moderating Effect Of Economic Policy Uncertaintymentioning

confidence: 99%

Improving Circular Supply Chain Performance through Green Innovations: The Moderating Role of Economic Policy Uncertainty

Liu

Wang²

2022

Sustainability

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The sudden outbreak and long-term trend of COVID-19 have brought huge attacks and uncertainty to the global economy, forcing countries to introduce various policies frequently to stimulate economic recovery. To realize sustainable development, firms established an environment-friendly economic development model by building a circular supply chain and implementing a green innovation strategy, which is expected to save resources and protect the environment by recycling resources. Based on this background, this study aims to determine the relationship between the uncertainty of economic policy, green innovation strategy, and circular supply chain performance. It divides green innovation strategies into green product innovation, green process innovation, green service innovation, and green logistics innovation to explore their different impacts on the performance of the circular supply chain. Simultaneously, the moderating effect of uncertainty of economic policy between green innovation and the performance of the circular supply chain is explored. Using survey data collected from 308 manufacturing firms in China, we empirically test the theoretical model and proposed hypotheses through the structural equation modeling approach. Our findings demonstrate that green product innovation, green process innovation, green logistics innovation, and green service innovation have a positive impact on the performance of the circular supply chain. Moreover, we also find that, contrary to our expectations, economic policy uncertainty plays a positive role in moderating the relationship between green innovation and circular supply chain performance. We believe that this paper has a clear contribution to the research on green innovation and circular supply chain management. This study provides a new perspective for the research on the integration of green innovation and circular supply chain, deepens firms’ understanding of green innovation strategy and circular supply chain, and provides important implications and guidance for manufacturing firms to better manage green innovation and circular supply chain practice as well as the risk of economic policy uncertainty.

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“…et al, 2020 ). External factors include litigation risk ( Wang and Wang, 2018 ), legal system environment ( Cui et al, 2018 ; Qian et al, 2019 ), product markets ( Haushalter et al, 2007 ), industry growth ( Yang et al, 2016 ), political uncertainty ( Jiang et al, 2015 ; Xu et al, 2016 ; Yu et al, 2019 ) and macroeconomic policies ( Lu and Han, 2013 ; Demir and Ersan, 2017 ; Su et al, 2020 ; Liu et al, 2021 ). As a portion of a company’s assets, cash is more likely to be disposed or misappropriated.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

The COVID-19 outbreak and corporate cash-holding levels: Evidence from China

Zhou

Zhang²,

Bai³

et al. 2022

Front. Psychol.

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By employing data from Shanghai and Shenzhen A-share markets for the period of 2019–2020, this paper examines the relationship between the degree of the COVID-19 pandemic’s impact on firms’ cash-holdings levels in China. We find that firms that are severely affected by the COVID-19 pandemic have higher current cash holdings levels, suggesting that the more positive (negative) the management tone in responding to the COVID-19 pandemic impact, the lower (higher) the firm’s current cash holdings. However, future corporate cash holdings decrease considerably irrespective of the corporate sentiment towards COVID-19. The positive sentiment of each firm’s management team towards the supply chain and the government policies results in a relative reduction of current cash holdings, whereas the severe impact on operating performance, especially the impact of the outbreak on the supply chain, demand, production and operations, and government policies, reduces the firm’ s future cash holdings. In addition, the impact of the pandemic has increased the current cash holdings of state-owned enterprises and reduced the future cash holdings of non-state-owned enterprises. Meanwhile, companies located in a city with a higher density of population or companies that experience relatively higher competition in the industry tend to undergo a severer impact on their current and future cash holdings due to the COVID-19 pandemic. Overall, this study sheds the light on stimulating the vitality of enterprise investment and promoting the domestic economic cycle.

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Economic policy uncertainty and firm’s cash holding in China: The key role of asset reversibility

Cited by 33 publications

References 32 publications

The impact of economic policy uncertainty on corporate social responsibility: A new evidence from food industry in China

The impact of economic policy uncertainty on corporate social responsibility: A new evidence from food industry in China

Improving Circular Supply Chain Performance through Green Innovations: The Moderating Role of Economic Policy Uncertainty

The COVID-19 outbreak and corporate cash-holding levels: Evidence from China

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