Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

Economic Policy Uncertainty and Corporate Leverage Ratio: Evidence in China

Authors
Yuxin Huang1, *
1School of Business, Massey University, Auckland, 0745, New Zealand
*Corresponding author. Email: guanghua.ren@gecacademy.cn
Corresponding Author
Yuxin Huang
Available Online 15 December 2021.
DOI
https://doi.org/10.2991/assehr.k.211209.542How to use a DOI?
Keywords
Economic policy uncertainty; leverage; debt ratio
Abstract

In the context of the current unstable macroeconomic environment, we explored the impact of economic policy uncertainty on the corporate leverage ratio. The study found that economic policy uncertainty significantly reduces firm leverage ratios. This relationship holds significantly after a series of robustness tests, supporting the point of risk aversion among corporate executives. Meanwhile, we found that firms are more inclined to reduce their short-term debt levels since short-term debts induce a greater liquidity risk for firms. Furthermore, we found that economic policy uncertainty affects firms’ behavior of reducing their leverage ratio mainly in non-state-owned enterprises and firms not audited by the Big Four auditors. This paper has a certain reference significance for the enterprise’s risk-related decision-making under the current macroeconomic environment.

Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
15 December 2021
ISBN
978-94-6239-483-4
ISSN
2352-5428
DOI
https://doi.org/10.2991/assehr.k.211209.542How to use a DOI?
Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

TY  - CONF
AU  - Yuxin Huang
PY  - 2021
DA  - 2021/12/15
TI  - Economic Policy Uncertainty and Corporate Leverage Ratio: Evidence in China
BT  - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
PB  - Atlantis Press
SP  - 3333
EP  - 3342
SN  - 2352-5428
UR  - https://doi.org/10.2991/assehr.k.211209.542
DO  - https://doi.org/10.2991/assehr.k.211209.542
ID  - Huang2021
ER  -