Economic Policy Uncertainty and Investment Efficiency
Asian Tax Journal Vol. 22 No. 6 (2021), pp. 45-74
Abstract
This study aims to conduct an empirical analysis on the effect of economic policy uncertainty, which has been actively studied in the recent accounting field, on the investment efficiency of the company focusing on Korean listed firms. 2021 is still living in an era of uncertainty where it is difficult to predict the next year or even one month due to the external shock of COVID－19. In particular, even in the case of Korean companies, a corporate culture based on an untact culture is developing due to the situation in which face－to－face reports cannot be made due to COVID－19. As a result of conducting an empirical analysis for the period from 1997 to 2019, it was found that the greater the uncertainty in the economic policy, the better the investment efficiency of the relevant company. Further analysis showed that the uncertainty of economic policy improves labor investment efficiency and decreases the amount of capital expenditure of the next period, but rather increases the R&D investment of the next period. This study is considered to be of great significance in that it comprehensively examines the various areas that the uncertainty of economic policy affects the investment efficiency of the Korean listed firms.
Keywords
- Economic policy uncertainty
- Investment efficiency
- Over－investment
- Research and development investment
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