Im, Hyun Joong
[Verfasser:in]
;
Oliver, Barry R.
[Sonstige Person, Familie und Körperschaft];
Park, Young Joon
[Sonstige Person, Familie und Körperschaft]
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 17, 2020 erstellt
Beschreibung:
This study investigates whether economic policy uncertainty (EPU) magnifies peer effects in corporate investment in China. Through use of the peer-firm-average idiosyncratic stock return to capture exogenous variation in peer firms' investment activities, we show that peer effects are stronger when EPU is higher. We also find that greater EPU lowers the precision of the information firms use to make decisions and eventually magnifies peer effects. We further demonstrate that increased EPU magnifies peer effects only for underinvesting firms. The results suggest that increased EPU could cause underinvestment problems to persist, slowing down recovery from an economic downturn