WU Di;HAN Jiayi;

• 1:College of Insurance
• 2: Shandong University of Finance and Economics
• 3:Legal Information Center
• 4: Peking University

Abstract：

By constructing an innovation decision-making model that includes economic policy uncertainty(EPU), this paper finds that EPU will have a negative impact on corporate innovation. Further analysis shows that it has asymmetric effects on long-term and short-term innovation decisions and puts forward two potential mechanisms of inhibitory effect in long-term: one is reducing follow-up investment, and the other is reducing marketization return. The empirical analysis verifies the inhibitory effect of EPU on corporate innovation and verifies two potential mechanisms. We further investigate the potential moderating effects: increased information transparency and of capital structure adjustment speed can mitigate the inhibition of EPU on corporate innovation. This study provides clear policy implication to ease the uncertainty of economic policy at the government level.

Key Words： Economic Policy Uncertainty;Corporate innovation;Information transparency;Capital Structure Adjustment Speed

Abstract:

Keywords:

Foundation: 山东省社会科学规划研究重点项目“胶东经济圈协同打造工业互联网研究”（21BJJJO1）的资助

Authors: WU Di;HAN Jiayi;

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• (1)website:http://www.policyuncertainty.com/research.html
• (2)In 1979,NBER of the United States cooperated with the American International Economic Cycle Research Center of Columbia University to establish an International Economic Indicator System (IEI) based on 7 developed countries including the United States,Canada,France,the United Kingdom,Germany,Italy,and Japan has been established to monitor the economic changes of important Western countries.
• (3)Capital density is the ratio of corporate capital input to labor input.