Firm's perception of economic policy uncertainty and corporate innovation efficiency
Current Economic Policy Uncertainty (EPU) indicators are highly correlated with macroeconomic growth. To better reveal the EPU perceived by each firm, a firm-level EPU index is constructed using a text mining method. Using data of Chinese A-share listed companies from 2011 to 2020, this study examin...
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| Format: | Article |
| Language: | English |
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Elsevier
2023-07-01
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| Series: | Journal of Innovation & Knowledge |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2444569X23000677 |
| _version_ | 1797834775595057152 |
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| author | Han Zhou Xiang Zhang Rui Ruan |
| author_facet | Han Zhou Xiang Zhang Rui Ruan |
| author_sort | Han Zhou |
| collection | DOAJ |
| description | Current Economic Policy Uncertainty (EPU) indicators are highly correlated with macroeconomic growth. To better reveal the EPU perceived by each firm, a firm-level EPU index is constructed using a text mining method. Using data of Chinese A-share listed companies from 2011 to 2020, this study examines the impact of a firm's perception of EPU on corporate innovation efficiency, computed using Stochastic Frontier Analysis (SFA) with a time-varying decay model. The empirical results show that corporate innovation efficiency decreases with a firm's perception of EPU. Additionally, the impact of traditional EPU indicators on innovation efficiency becomes statistically insignificant after the macroeconomic variable is added, demonstrating the importance of introducing firm-specific perceptions of EPU. Moreover, this negative impact is attenuated for firms with higher board independence and lower board ownership, while State-Owned Enterprises (SOEs) are less impacted. Furthermore, the impact of a firm's perception of EPU on corporate innovation efficiency is more pronounced for high-tech firms and those without political connections. We propose the following policy implications: First, it is vital for governments to provide stable economic circumstances to maintain corporate innovation efficiency. Second, mixed ownership reform is crucial in China; the risk-taking of non-state-owned firms will be greatly improved; thus, the innovation efficiency of non-state-owned firms will improve. |
| first_indexed | 2024-04-09T14:42:55Z |
| format | Article |
| id | doaj.art-ecd9527683614a7fae358ce906e7e832 |
| institution | Directory Open Access Journal |
| issn | 2444-569X |
| language | English |
| last_indexed | 2024-04-09T14:42:55Z |
| publishDate | 2023-07-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Innovation & Knowledge |
| spelling | doaj.art-ecd9527683614a7fae358ce906e7e8322023-05-03T04:10:14ZengElsevierJournal of Innovation & Knowledge2444-569X2023-07-0183100371Firm's perception of economic policy uncertainty and corporate innovation efficiencyHan Zhou0Xiang Zhang1Rui Ruan2School of Finance, Nanjing University of Finance and Economics, Nanjing, ChinaAccounting School, Chongqing University of Technology, Chongqing, China; Corresponding author at: No. 69, Hongguang avenue, Banan District, Chongqing, 400054.Center of China Fiscal Development, Central University of Finance and Economics, Beijing, ChinaCurrent Economic Policy Uncertainty (EPU) indicators are highly correlated with macroeconomic growth. To better reveal the EPU perceived by each firm, a firm-level EPU index is constructed using a text mining method. Using data of Chinese A-share listed companies from 2011 to 2020, this study examines the impact of a firm's perception of EPU on corporate innovation efficiency, computed using Stochastic Frontier Analysis (SFA) with a time-varying decay model. The empirical results show that corporate innovation efficiency decreases with a firm's perception of EPU. Additionally, the impact of traditional EPU indicators on innovation efficiency becomes statistically insignificant after the macroeconomic variable is added, demonstrating the importance of introducing firm-specific perceptions of EPU. Moreover, this negative impact is attenuated for firms with higher board independence and lower board ownership, while State-Owned Enterprises (SOEs) are less impacted. Furthermore, the impact of a firm's perception of EPU on corporate innovation efficiency is more pronounced for high-tech firms and those without political connections. We propose the following policy implications: First, it is vital for governments to provide stable economic circumstances to maintain corporate innovation efficiency. Second, mixed ownership reform is crucial in China; the risk-taking of non-state-owned firms will be greatly improved; thus, the innovation efficiency of non-state-owned firms will improve.http://www.sciencedirect.com/science/article/pii/S2444569X23000677G18G34O32 |
| spellingShingle | Han Zhou Xiang Zhang Rui Ruan Firm's perception of economic policy uncertainty and corporate innovation efficiency Journal of Innovation & Knowledge G18 G34 O32 |
| title | Firm's perception of economic policy uncertainty and corporate innovation efficiency |
| title_full | Firm's perception of economic policy uncertainty and corporate innovation efficiency |
| title_fullStr | Firm's perception of economic policy uncertainty and corporate innovation efficiency |
| title_full_unstemmed | Firm's perception of economic policy uncertainty and corporate innovation efficiency |
| title_short | Firm's perception of economic policy uncertainty and corporate innovation efficiency |
| title_sort | firm s perception of economic policy uncertainty and corporate innovation efficiency |
| topic | G18 G34 O32 |
| url | http://www.sciencedirect.com/science/article/pii/S2444569X23000677 |
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