The effect of economic policy uncertainty on investor information asymmetry and management disclosures

Nagar, Venky; Schoenfeld, Jordan; Wellman, Laura

doi:10.1016/j.jacceco.2018.08.011

Cited by 436 publications

(290 citation statements)

References 59 publications

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“…There is growing awareness of the increasingly important role that voluntary disclosure may play in facilitating better internal corporate decision making (Cohen and Simnett, ; Christensen, ; Barth et al ., ; Brown et al ., ; Nagar et al . ). In the P2P market, disclosure, such as mandatory or voluntary disclosure, hard information or soft information, also has a great influence on mitigating information asymmetry and adverse selection (Zhu, ; Li and Hu, ).…”

Section: Literature Reviewmentioning

confidence: 97%

Seeing is important: the usefulness of video information in P2P

Wang

Zhang

2019

Accounting & Finance

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P2P lending is an important research subject of rising internet finance research. This paper uses unique data from Renrendai, a leading platform in China, to test the influence of video information on P2P lending behavior. Results suggest that, first, the lower the borrower's credit rating is, the more likely they are to provide video information. Second, compared to the video-information-absent borrowers, the otherwise borrowers can get easier access to a loan and offer a lower interest rate. These results indicate that compared to text messages, video information can increase the borrower's creditworthiness and reduce the transaction risk. Thereupon seeing is important in online P2P lending. Third, when the borrower's credit rating is lower, the video effect is significant. The study makes sense in terms of the enrichment of P2P lending literature and the enlightenment on decision-making of both lenders and borrowers.

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Section: Literature Reviewmentioning

confidence: 97%

Seeing is important: the usefulness of video information in P2P

Wang

Zhang

2019

Accounting & Finance

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“…They point out that a high level of EPU is negatively associated with M&As, and this impact is exacerbated for more irreversible deals and acquirers whose product demand or stock returns are more sensitive to government policy. In addition to corporate investment, the BBD EPU index is significantly associated with risk premia [32], excess market returns [33], corporate bond credit spreads [10], sensitivity of investment to the cost of capital [11], and firms' voluntary disclosures [17] and internal controls [34]. In addition to the BBD index, election dummies are widely used to study the impact of policy uncertainty.…”

Section: Literature Reviewmentioning

confidence: 99%

“…EPU is outside of the firms' controls and is considered exogenous to any specific firm [16,17]. Indeed, EPU is a macroeconomic level variable that may influence firms' microeconomic behaviors, but any single firm's decisions can hardly affect EPU.…”

Section: Economic Policy Uncertaintymentioning

confidence: 99%

“…Based on these criterion, they derive the EPU index for several countries by counting the number of articles containing textual terms related to EPU. Since EPU is outside of the firms' controls and is considered exogenous to any specific firm [16,17], a regression estimate on the impact of EPU on corporate microeconomic behavior might not suffer severe endogeneity problem. The other important variable in our study is social trust.…”

Section: Introductionmentioning

confidence: 99%

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Impact of Economic Policy Uncertainty on Trade Credit Provision: The Role of Social Trust

Liu

Dong

2020

Sustainability

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This paper explores the impact of economic policy uncertainty (EPU) on trade credit while taking into account the interactive role of social trust. The analysis is based on the panel data econometric model with fixed effects. Using firm-level data across 16 economies from 1995Q1 to 2015Q1, we find that (i) there exists a negative and highly significant relationship between economic policy uncertainty and the provision of trade credit; (ii) this relation is weaker for firms in countries with higher levels of social trust; and (iii) the effects of EPU and social trust are both more substantial for firms in more financially constrained industries. The impact of social trust is not a result of people's high confidence in government, an effective legal system of enforcing contracts, a high-quality institutional system or an excellent system of protecting shareholders. Our result is robust if we exclude business cycle effects or use an alternative measure of financial constraints.

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“…First, the increase of policy uncertainty would worsen the external financing environment (Zhang et al ., ). Heightened policy uncertainty would increase the magnitude of information asymmetry in financial markets (Nagar et al ., ). Banks would raise loan thresholds and reduce loan originations to avoid risks (Bordo et al ., ).…”

Section: Introductionmentioning

confidence: 97%

Economic policy uncertainty and corporate inventory holdings: evidence from China

Zeng

Zhong

2019

Accounting & Finance

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We investigate the impact of economic policy uncertainty (EPU) on corporate inventory holdings in China over the period 2007-2017. We find that EPU leads firms to significantly reduce inventory holdings and this effect is particularly pronounced among non-state-owned enterprises. The adjustment of inventory holdings enhances firms' operating and market performance consequently. In addition, firms with greater financial constraints or stronger external governance are more affected by EPU. Further exploration shows that EPU induces high precautionary cash holdings, which crowds out inventories. Our results illustrate that firms reallocate between inventories and cash to cope with uncertainty associated with economic policy changes.

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The effect of economic policy uncertainty on investor information asymmetry and management disclosures

Cited by 436 publications

References 59 publications

Seeing is important: the usefulness of video information in P2P

Seeing is important: the usefulness of video information in P2P

Impact of Economic Policy Uncertainty on Trade Credit Provision: The Role of Social Trust

Economic policy uncertainty and corporate inventory holdings: evidence from China

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