Research on the influence of fiscal policy uncertainty on corporate strategic investment – Evidence from China

Abstract

Corporations should pay attention to various policies issued by The Chinese government when making strategic investment. This paper discusses the influence of fiscal policy uncertainty on corporate strategic investment and its mechanism. The results show that the uncertainty of fiscal policy has a nonlinear effect on strategic investment. With the increase of fiscal policy uncertainty, strategic investment increases first and then decreases. The nonlinear mediation effect model and the nonlinear moderation effect model show that the uncertainty of fiscal policy affects the strategic investment of corporations by influencing corporate financing constraints and investor sentiment, which is weakened by the size of corporations and strengthened by the business environment. Further research shows that the nonlinear effect between fiscal policy uncertainty and strategic investment is stronger in non-state-owned corporations, corporations with a low proportion of independent directors and corporations without industrial policy support. Finally, this paper puts forward some suggestions for The Chinese government and corporations to deal realistically with the uncertainty of fiscal policy.