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Economic policy uncertainty, CEO characteristics and firm R&D expenditure: a Bayesian analysis

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  • Hui Jiang
  • Caiyun Liu

Abstract

This paper applies a linear Bayesian regression model to study the effects of economic policy uncertainty (EPU) and Chief Executive Officer (CEO) characteristics on firm Research and Development (R&D) expenditure. We specifically analysed data from 1,163 Chinese companies listed as A-shares from 2008–2016. EPU is believed to curtail firm investments as it causes unexpected market conditions. Yet, our findings obtained with Bayesian analysis show a positive relationship between EPU and firm R&D expenditure. Specifically, we found that some CEO attributes (e.g., age, tenure and marketing/sales experience) led to a negative relationship between EPU and firm R&D expenditure, whereas other attributes (e.g., education, overseas study/work experience, product R&D experience, and process engineering experience) lead to a positive relationship. Our findings provide nuanced insights into how different CEO characteristics influence firms’ R&D expenditure in a context of uncertainty.

Suggested Citation

  • Hui Jiang & Caiyun Liu, 2020. "Economic policy uncertainty, CEO characteristics and firm R&D expenditure: a Bayesian analysis," Applied Economics, Taylor & Francis Journals, vol. 52(34), pages 3709-3731, July.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:34:p:3709-3731
    DOI: 10.1080/00036846.2020.1721422
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    Cited by:

    1. Messner, Wolfgang, 2023. "The contingency impact of culture on health security capacities for pandemic preparedness: A moderated Bayesian inference analysis," Journal of International Management, Elsevier, vol. 29(5).
    2. Yuchen Lin & Daxin Dong & Jiaxin Wang, 2021. "The Negative Impact of Uncertainty on R&D Investment: International Evidence," Sustainability, MDPI, vol. 13(5), pages 1-21, March.
    3. Yunpeng Wang & Chun-Ping Chang, 2023. "The effect of policy stability on clean energy investment," Economic Change and Restructuring, Springer, vol. 56(1), pages 327-344, February.
    4. Wei Yin & Berna Kirkulak-Uludag & Ziling Chen, 2021. "Is the Sharing Economy Green? Evidence from Cross-Country Data," Sustainability, MDPI, vol. 13(21), pages 1-19, October.
    5. Wen, Huwei & Lee, Chien-Chiang & Zhou, Fengxiu, 2022. "How does fiscal policy uncertainty affect corporate innovation investment? Evidence from China's new energy industry," Energy Economics, Elsevier, vol. 105(C).
    6. Bin Wang & Samia Khalid & Hamid Mahmood, 2024. "R&D Spending and Economic Policy Uncertainty in Asian Countries: an Advanced Panel Data Estimation Study," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4710-4729, March.
    7. Qiuqin He & Agustín Carrilero-Castillo & Joaquin Gonzalez-Garcia, 2022. "Do CEO characteristics influence a firm’s investment in brand equity? Evidence from Chinese listed firms," International Entrepreneurship and Management Journal, Springer, vol. 18(1), pages 73-87, March.
    8. Amy Kahn & Atoko Kasongo & Moses M. Sithole & Kgabo Hector Ramoroka, 2024. "An analysis of the micro- and macro-economic determinants of firm R&D intensity in the South African business sector," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 16(3), pages 297-308, April.
    9. Xuan Yang & Shihao Mao & Luxuan Sun & Chao Feng & Yinshuang Xia, 2022. "The Effect of Economic Policy Uncertainty on Green Technology Innovation: Evidence from China’s Enterprises," Sustainability, MDPI, vol. 14(18), pages 1-17, September.
    10. Xinfeng Jiang & Jiayi Zhu & Ahsan Akbar & Ziyu Hou & Xiaolan Bao, 2022. "The dark side of executives' professional background: Evidence from Chinese firm's stock price crash risk," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3771-3784, December.
    11. Md Arafat Hossain & Elaine Yen Nee Oon, 2022. "Board leadership, board meeting frequency and firm performance in two‐tier boards," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(3), pages 862-879, April.
    12. Alam, Ahmed W. & Farjana, Ashupta & Houston, Reza, 2024. "Geopolitical risk, CEO power, and corporate lobbying: Do powerful CEOs lobby more?," Finance Research Letters, Elsevier, vol. 62(PA).
    13. Isaac Adubofour & Samuel Tabiri & Bright Parker Quayson & Jeffrey Appiagyei & Isaac Duah Boateng, 2024. "The Link between Sustainable Innovation and Industrial Performance: The Case of the United States," Sustainability, MDPI, vol. 16(8), pages 1-17, April.
    14. Zhang, Zhongqingyang & Zhu, Huiming & Zhou, Zhongbao & Zou, Kai, 2022. "How does innovation matter for sustainable performance? Evidence from small and medium-sized enterprises," Journal of Business Research, Elsevier, vol. 153(C), pages 251-265.
    15. Zhengxin Zhang & Bing Xu & Piao Li, 2023. "What affects the quality of sustainability report texts? Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1440-1456, May.

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