Research On The Impact Of Economic Policy Uncertainty On Corporate Capital Expenditure

As the world’s second largest economy,although it is a developing country with relatively weak financial market,China’s economy has achieved remarkable growth in the past 30 years.In stark contrast to the laissez-faire capitalism of the west,the Chinese government plays an important role in regulating economic development.Following the financial crisis in 2008,various governments took various economic measures to consolidate their own economic development and avoid the recurrence of similar economic problems.Our government also issued many economic policies to maintain the stable development of the economy.In 2018,when a trade war between China and the United States starts,the Chinese government will actively introduce various policies to deal with it.However,the frequent changes of policies in a certain period mean that the current macroeconomic uncertainty increases.For a company,macroeconomic fluctuations will affect its decision makers’ expectations for the future,thus affecting their investment behavior.As an important part of long-term investment,capital expenditure plays an important role in a company’s success.When looking through the studies of domestic and foreign scholars on uncertainty and enterprise investment,some of them study the impact of uncertainty on investment behavior in general.,which makes it difficult to distinguish which kind of uncertainty affects the investment of enterprises.Another kind of research is on macroeconomic uncertainty.When studying the impact of such uncertainty on investment,it can be found that these indicators representing macro uncertainty will have mutual influence.Therefore,among many uncertainties,this paper chooses economic policy uncertainty to study.Baker,Bloom & Davis(2013)constructed the index of economic policy uncertainty for China,which also well measured the degree of economic policy uncertainty.This paper mainly studies the relationship between economic policy uncertainty and capital expenditure of enterprises from two aspects of real options and financing premium,and expounds the impact of economic policy uncertainty on capital expenditure.This paper takes China’s A-share listed companies as the research object for empirical analysis.The results show that when the uncertainty of economic policy increases,the investment level of enterprises will decrease,and vice versa.Then respectively to join in the basic model of return on investment capital and economic policy uncertainty by item,internal financing level and economic policy by item,and represents the virtual variable nature of the ownership of enterprises and economic policy uncertainty by item,to study their impact on the relationship between economic policy uncertainty and capital expenditure of enterprises.Finally,it is found that enterprises with higher return on investment capital,more internal financing and non-state-owned enterprises can mitigate the negative impact of policy uncertainty on corporate investment.Finally,in order to ensure the robustness of my research results,we replaced the EPU with the official replacement variable(Change)to conduct the regression again,and the regression results were consistent with the previous conclusions.Based on the research results of this paper,some personal suggestions are put forward to optimize the capital expenditure decision of listed companies in China and realize the stable economic growth of our country.