Economic policy uncertainty and investment decisions: Do firm characteristics matter?

Abstract

This study is conducted to examine the impact of Global Economic Policy Uncertainty (GEPU) and China's Economic Policy Uncertainty (China EPU - CEPU) on the investment scale and efficiency of Vietnamese enterprises. The research sample was collected over a 10-year period, from 2012 to 2021, including 190 companies listed on the Hanoi Stock Exchange (HNX) and the Ho Chi Minh City Stock Exchange (HOSE). Research results demonstrate that uncertain Global and Chinese economic policies can inhibit the expansion and at the same time reduce the efficiency of enterprises' investment. In addition, the study also divides the research sample into different groups based on factors such as the firm ownership, level of capital concentration and industry properties, in order to investigate whether the influence of GEPU and CEPU are different for firms of different characteristics. On the other hand, testing the impact of GEPU and CEPU on performance and performance volatility was also conducted and the results show that increasing uncertainty in global economic policies (GEPU) leads to decreasing improvement of business performance.