The impact of macroeconomic policy uncertainty on micro-enterprise investment efficiency-Empirical evidence from China

Abstract

The impact of macroeconomic policy uncertainty (EPU) on micro-level entities has garnered increasing attention in economic circles. This study examines the influence of EPU on the efficiency of investments made by China's A-share listed companies between 2016 and 2021. Using a panel fixed effect model for analysis, the research reveals that EPU has a notable adverse effect on the investment efficiency of enterprises. Furthermore, it suggests that advancements in digital finance, strong ESG performance, and enhanced entrepreneurial confidence can mitigate this negative impact effectively. The study also highlights that enterprises with lower valuation, shareholder control, limited audit reputation, and no bank connections are more vulnerable to the impact of EPU on investment efficiency compared to those with higher valuation, manager control, strong audit reputation, and bank connections. Consequently, future efforts should be directed towards enhancing the stability and relevance of economic policies, promoting digital finance, and enhancing corporate governance structures.