Economic Policy Uncertainty and Corporate Leverage Ratio: Evidence in China
- https://doi.org/10.2991/assehr.k.211209.542How to use a DOI?
- Economic policy uncertainty; leverage; debt ratio
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.
- © 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 -