Semantic Scholar Open Access 2020 470 sitasi

Economic policy uncertainty, cost of capital, and corporate innovation

Zhaoxia Xu

Abstrak

We examine the impact of government economic policy uncertainty (GEPU) on corporate innovation and identify a cost-of-capital transmission channel. We find that GEPU increases firms’ cost of capital, which translates into lower innovation. As economic policy uncertainty rises, firms with more exposure to such uncertainty face a higher weighted average cost of capital and innovate less. Innovations of financially constrained firms and firms relying on external finance in a competitive environment are affected more. Our study provides novel evidence that higher economic policy uncertainty hinders innovation not only through the traditional investment irreversibility channel, but also through the cost-of-capital channel.

Topik & Kata Kunci

Economics

Penulis (1)

Zhaoxia Xu

Format Sitasi

APA MLA BibTeX

Xu, Z. (2020). Economic policy uncertainty, cost of capital, and corporate innovation. https://doi.org/10.1016/j.jbankfin.2019.105698

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Informasi Jurnal

Tahun Terbit: 2020
Bahasa: en
Total Sitasi: 470×
Sumber Database: Semantic Scholar
DOI: 10.1016/j.jbankfin.2019.105698
Akses: Open Access ✓