scholarly journals Financial reporting under economic policy uncertainty

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peterson Kitakogelu Ozili
Keyword(s):  
Economic Policy ◽  
Financial Reporting ◽  
Fair Value ◽  
Policy Uncertainty ◽  
Fair Value Accounting ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
New Information ◽  
Accounting Numbers ◽  
The Relationship

Purpose This paper aims to discuss financial reporting under economic policy uncertainty. Design/methodology/approach The paper uses discourse analysis to examine financial reporting under economic policy uncertainty. Findings The paper identifies the link between economic policy uncertainty and financial reporting, in terms of earnings management and fair value accounting. It argues that high economic policy uncertainty will transmit fewer new information to firms which can motivate managers to influence accounting numbers in the direction of the desired financial reporting outcome. Originality/value The relationship between economic policy uncertainty and financial reporting has not been studied. This paper is one of the first papers to relate economic policy uncertainty to financial reporting behavior.

Economic policy uncertainty and hotel occupancy: the mediating effect of consumer sentiment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ozgur Ozdemir ◽  
Wenjia Han ◽  
Michael Dalbor
Keyword(s):  
Economic Policy ◽  
Structural Equation ◽  
Mediating Effect ◽  
Equation Modeling ◽  
Policy Uncertainty ◽  
Economic Uncertainty ◽  
Consumer Sentiment ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
The Relationship

PurposeThe purpose of this paper is twofold. First, the study examines the prolonged effect of policy-related economic uncertainty on hotel operating performance, particularly the room demand (occupancy). Second, the study attempts to explain why occupancy drops when the perceived economic uncertainty is high by studying the mediating effect of consumer sentiment in the relationship between economic policy uncertainty and hotel demand.Design/methodology/approachThis quantitative study uses secondary data – US economic policy uncertainty (EPU) index, University of Michigan's index of consumer sentiment (ICS), and property-level hotel operating data from three states of the US – California, Florida and New York. Data were analyzed using random effect regression and structural equation modeling. Robustness tests were conducted to enhance the reliability of the research findings.FindingsRandom-effects regression analysis reveals that policy-related economic uncertainty has a negative and lead-lag effect on hotel occupancy, average daily rate and revenue per available room (RevPAR). Structural equation modeling results show that the relationship between economic policy uncertainty and hotel occupancy is significantly mediated by consumer sentiment. Robustness test results support the findings from the main analysis.Practical implicationsThis study offers valuable implications for the hotel professionals in regard to anticipating the economic impact of policy-related uncertainty on hotel industry and understanding how consumer sentiment affects demand at such crises times. Moreover, the study suggests potential course of actions to deal with declining room demand at times of uncertainty.Originality/valueThis empirical study explores how economic policy uncertainty affects hotel performance at the property level and explains the mediating effect of consumer sentiment on hotel room demand. The study provides a first-hand evidence of how consumer sentiment relates to the perception of economic uncertainty and leads to decline in consumer demand. In that regard, findings of the study have valuable implications for hospitality industry practitioners and relevant policymakers.

Economic policy uncertainty, R&D expenditures and innovation outputs

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reza Tajaddini ◽  
Hassan F. Gholipour
Keyword(s):  
Economic Policy ◽  
Fixed Effects ◽  
The United States ◽  
Policy Uncertainty ◽  
Economic Activities ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
The United Kingdom ◽  
Per Capita ◽  
The Relationship

PurposeThe purpose of this study is to examine the relationship between the news-based economic policy uncertainty (EPU), research and development (R&D) expenditures per capita and innovation outputs.Design/methodology/approachData from 1996 to 2015 for 19 countries (Australia, Brazil, Canada, Chile, China, France, Germany, India, Ireland, Italy, Japan, Netherlands, Russia, Singapore, South Korea, Spain, Sweden, the United Kingdom and the United States) are used. The authors apply country and year fixed-effects models for the estimations.FindingsThe study findings show that higher levels of EPU are positively associated with higher R&D expenditures per capita as well as innovation outputs (patent applications, patent grants and trademark applications).Practical implicationsThis study deepens our understanding on the policy uncertainty–economic activities nexus and expands the literature on uncertainty, which is still at an initial phase of development, leading to generate a variety of open research questions for further investigation and study (Bloom, 2014).Originality/valueThere has not been an empirical investigation on the links between EPU and R&D expenditures and innovation outputs across several countries. The authors address this gap in the literature.

Economic policy uncertainty and house prices in Germany: evidence from GSADF and wavelet coherence techniques

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dervis Kirikkaleli ◽  
Korhan Gokmenoglu ◽  
Siamand Hesami
Keyword(s):  
Economic Policy ◽  
Granger Causality ◽  
Price Index ◽  
Wavelet Coherence ◽  
Housing Sector ◽  
Policy Uncertainty ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Causality Tests ◽  
The Relationship

Purpose This study aims to answer the following questions which have not been investigated in the literature to the best knowledge: Is there any bubble in the German housing sector between 2005–2009 and 2012–2017? and Is there any linkage between economic policy uncertainty and the housing sector price index? Design/methodology/approach This study aims to shed some light on the German’s housing sector by investigating the housing sector bubble and the causal link between the housing sector index and economic policy uncertainty in Germany, using GSADF, Granger causality, Toda Yamamoto causality and wavelet coherence tests. Findings The findings reveal that there are some bubbles in the housing sector in Germany for the periods investigated, there is a positive correlation between economic policy uncertainty and housing sector price index at different frequencies and different periods and between 2008 and 2009 and between 2011 and 2013, economic policy uncertainty leads housing sector price index. The consistency of the findings from wavelet coherence is confirmed by the outcomes of Granger causality and Toda Yamamoto causality tests. Originality/value To the best knowledge, this is the first study that empirically investigates the relationship between the housing sector and EPU using a novel wavelet econometric method. In addition, this paper extends the research focused on the associations between the housing sector and EPU, by checking the bubbles in the market in different time horizons by using the longest available data span. Furthermore, the consistency of the findings from wavelet causality is confirmed by the outcomes of Granger causality and Toda Yamamoto causality tests. Finally, compared to the previous literature on the relationship between housing and EPU, the study uses a hedonic index for housing for the first time in the case of Germany.

Economic policy uncertainty and corporate social responsibility performance: evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tianjiao Zhao ◽  
Xiang Xiao ◽  
Bingshi Zhang
Keyword(s):  
Economic Policy ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Inhibitory Effect ◽  
Policy Uncertainty ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Corporate Social ◽  
The Relationship ◽  
Csr Engagement

Purpose The purpose of this paper is to show how the external issue of economic policy uncertainty (EPU) affects enterprises’ corporate social responsibility (CSR). Design/methodology/approach This study investigates the relationship between EPU and CSR based on the Chinese capital market from 2010 to 2018. Following the most recent studies focused on economic policy uncertainty, this paper uses the news-based method proposed by Baker et al. (2016) to measure EPU and explore the effect of EPU on CSR, as well as the mediating role of state ownership in such a relationship. Findings Empirical results show that increasing EPU will restrain enterprises’ social responsibility behaviour and the inhibitory effect is more obvious for state-owned enterprises. Further analyses reveal that the inhibitory effect of EPU on CSR is stronger for enterprises that face severe financial constraints and is significant for various components of CSR, and trade policy uncertainty could also curb enterprises’ social responsibility behaviour. Practical implications As a stable economic environment is important for enterprises’ CSR engagement, the present study’s conclusions can help policymakers better understand the implications of policy stability for enterprises’ financial and non-financial decisions and especially their CSR decisions. Social implications With the increasing attention paid to the CSR of enterprises, this study provides evidence that enterprises should develop appropriate CSR strategies according to the economic policy environment and enhance their capacity to withstand the risks generated by EPU. Originality/value To the best of the author’s knowledge, this study is the first to analyse the relationship between EPU and CSR. The results contribute to a better understanding of what issues influence enterprises’ CSR engagement, highlighting the importance of a stable economic policy environment and of enterprises’ ability to withstand risks.

scholarly journals The dynamic relationship between economic policy uncertainty and substantial economic growth in China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Junchao Li ◽  
Shan Huang
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Economic Policy ◽  
Policy Uncertainty ◽  
Economic Policies ◽  
Causality Test ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Different Types ◽  
The Relationship

PurposeUnder the background of the overall increase of China's economic policy uncertainty and the urgent need for the transformation and upgrading of the substantial economy, this paper studies the time-varying causality between China's economic policy uncertainty and the growth of the substantial economy through bootstrap rolling window causality test, further refines economic policies and studies the causal differences between different types of economic policies and substantial economic growth, refining the conclusions of previous studies.Design/methodology/approachThis paper first studies the causal relationship between China's economic policy uncertainty and substantial economic growth in the full sample period through bootstrap Granger causality test. Then, the paper tests the short-term and long-term stability of the parameters of the VAR model, and it is found that the model parameters are unstable in both the short and long term, so the results of the Granger causality test of the full sample are not credible. Finally, we conduct a dynamic test of the causal relationship between China's economic policy uncertainty and substantial economic growth by means of rolling window, so as to comprehensively analyze the dynamic characteristics and sudden changes of the relationship between them.FindingsThe research shows that economic policy uncertainty in China has a significant inhibiting effect on the growth of substantial economy. Growth in the substantial economy will drive up economic policy uncertainty before 2016 and restrain it after that. In addition, this paper further subdivides economic policy uncertainty to explore the causal differences between different types of economic policy uncertainty and substantial economic growth. The test results show that the relationship between them has obvious policy heterogeneity. The fiscal policy uncertainty and the monetary policy uncertainty, as the main policy means in China, has a significant impact on the growth rate of substantial economy in multiple ranges, but the effect time is short. Although trade policy uncertainty has a significant impact on the growth rate of substantial economy only during the financial crisis, the effect lasts for a long time. The impact of exchange rate and capital account policy uncertainty on the growth rate of substantial economy is mainly reflected after 2020.Originality/valueThe values of this paper are as follows: First, the economic policy uncertainty is combined with the growth of substantial economy, which makes up the gap of previous studies. Second, the economic policy uncertainty is further subdivided. The paper explores the causal differences between different types of economic policy uncertainties and the growth of substantial economy, so as to make the research more detailed. Finally, different from the previous static analysis, this paper uses dynamic model to examine the relationship between China's economic policy uncertainty and the growth of substantial economy from a dynamic perspective, with richer research conclusions.

Geopolitical risk, economic growth, economic uncertainty and international inbound tourism: an Indian Illustration

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sudeshna Ghosh
Keyword(s):  
Economic Growth ◽  
Economic Policy ◽  
Trade Openness ◽  
Policy Uncertainty ◽  
Tourism Demand ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Long Run ◽  
Geopolitical Risks

Purpose This paper aims to consider the role of geopolitical risk in explaining tourism demand in India, a major tourist destination of the Asian region. Furthermore, the study also considers how in addition to geopolitical risk, economic policy uncertainty, economic growth, exchange rate, inflation and trade openness impact tourism demand. Design/methodology/approach The Bayer and Hanck (2013) method of cointegration is applied to explore the relationship between geopolitical risk and tourism demand. Furthermore, the study has also used the auto distributed lag model to determine whether there is a long-run cointegrating association between tourism demand, geopolitical risk, economic policy uncertainty, economic growth, exchange rate and trade openness. Finally, the vector error correction model confirms the direction of causality across the set of the major variables. Findings This paper finds that geopolitical risk adversely impacts inbound international travel to India. This study also obtains the consistency of the results across different estimation techniques controlling for important macro variables. The Granger causality test confirms the unidirectional causality from geopolitical risk to tourism and further from economic uncertainty to tourism. The findings from the study confirm that geopolitical risks have long-term repercussions on the tourism sector in India. The results indicate that there is an urgent need to develop a pre-crisis management plan to protect the aura of Indian tourism. The tourism business houses should develop skilful marketing strategies in the post-crisis to boost the confidence of the tourists. Research limitations/implications This paper provides valuable practical implications to tourism business houses. The tourism business houses can explore geopolitical risk measure and economic policy uncertainty measure to analyse the demand for international tourism in India. Further, the major stakeholders can establish platforms to help tourists to overcome the fear associated with geopolitical risk. Originality/value This study is the first of its kind to explore the geopolitical risks and their long-run consequences in the context of tourism in India. The study puts emphasis on the role of national policy to maintain peace otherwise it would be detrimental to tourism.

Economic policy uncertainty and stock prices in BRIC countries: evidence from asymmetric frequency domain causality approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mucahit Aydin ◽  
Ugur Korkut Pata ◽  
Veysel Inal
Keyword(s):  
Economic Policy ◽  
Frequency Domain ◽  
Stock Prices ◽  
Policy Uncertainty ◽  
Causality Test ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Bric Countries ◽  
Causality Tests ◽  
Asymmetric Causality

Purpose The aim of this study is to investigate the relationship between economic policy uncertainty (EPU) and stock prices during the period from March 2003 to March 2021. Design/methodology/approach The study uses asymmetric and symmetric frequency domain causality tests and focuses on BRIC countries, namely, Brazil, Russia, India and China. Findings The findings of the symmetric causality test confirm unidirectional permanent causality from EPU to stock prices for Brazil and India and bidirectional causality for China. However, according to the asymmetric causality test, the findings for China show that there is no causality between the variables. The results for Brazil and India indicate that there is unidirectional permanent causality from positive components of EPU to positive components of stock prices. Moreover, for Brazil, there is unidirectional temporary causality from the negative components of EPU to the negative components of stock prices. For India, there is temporary causality in the opposite direction. Originality/value The reactions of financial markets to positive and negative shocks differ. In this context, to the best of the authors’ knowledge, this study is the first attempt to examine the causal relationships between stock prices and uncertainty using an asymmetric frequency domain approach. Thus, the study enables the analysis of the effects of positive and negative shocks in the stock market separately.

Economic policy uncertainty and fine wine prices

2020 ◽  
Vol 32 (3) ◽  
pp. 457-476
Author(s):  
Nithya Shankar ◽  
Bill Francis
Keyword(s):  
Economic Policy ◽  
Information Criterion ◽  
Government Policies ◽  
Time Lags ◽  
Policy Uncertainty ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
The Uk ◽  
The Impact ◽  
Wine Markets

Purpose The paper aims to investigate the impact of economic policy uncertainty (EPU) (i.e. uncertainty due to government policies) on fine wine prices. Design/methodology/approach The paper uses the Baker et al. (2016) monthly news-based measure of EPU for the leading wine markets: the USA, the UK, France, Germany and China in conjunction with monthly fine wine pricing data from the London International Vintners Exchange (Liv-ex). The wine sub-indices used are the Liv-ex 500 (Bordeaux), Burgundy 150, Champagne 50, Rhone 100, Italy 100, California 50, Port 50 and Rest of the World 50. The Prais–Winsten and Cochrane–Orcutt regressions are used for our analyses to correct for effects of serial correlation. Time lags are chosen based on the appropriate information criterion. Findings Changes in EPU levels negatively impact changes in the Liv-ex 500 index for all our leading wine markets except France, the Champagne 50 index for the UK and the Burgundy 150 and the Rhone 100 indices for Germany, with the effects being significant for at least up to a quarter before EPU is detected. The authors did not find significant results for the EPU of France. Practical implications The paper aims to provide insights into whether EPU creates opportunities or threats for investors and wineries. Originality/value A forward-looking news-based EPU measure is used to gain insights into how the different Liv-ex sub-indices react to increases in uncertainty centered around government policies across a sample of different countries.

scholarly journals The (un)suitability of fair-value accounting in emerging economies: the case of Vietnam

2019 ◽  
Vol 15 (2) ◽  
pp. 170-197 ◽  
Author(s):  
Lisa-Uyen Nguyen
Keyword(s):  
Financial Reporting ◽  
Institutional Environment ◽  
Fair Value ◽  
Business Environment ◽  
Future Research ◽  
Critical Examination ◽  
Fair Value Accounting ◽  
Structured Interviews ◽  
Corporate Misconduct ◽  
Content Type

Purpose This study aims to explore the suitability and challenges of implementing fair value accounting (FVA) in Vietnam, an emerging/transitioning economy. While such implementation would enable convergence with International Financial Reporting Standards, standard setters and auditors have raised practical concerns about its adoption. Design/methodology/approach This qualitative study uses semi-structured interviews with regulators and auditors, together with an analysis of two fraud cases that illustrate the business environment in Vietnam. Public, private and capture theories guide the analysis. Findings The business and institutional environment in Vietnam creates several impediments to FVA being effectively implemented and transparently applied. Given the major challenges identified regarding the infrastructure necessary for this valuation system, the premature adoption of FVA may become a catalyst for corporate misconduct. Research limitations/implications The findings are derived from data aggregated from two fraud cases and interviews, and as such, the results may not be generalisable to other settings. However, these findings may inform future research, particularly after the Ministry of Finance provides further guidance on the use of FVA in Vietnam. Practical implications A timely and critical examination of the challenges of implementing FVA in a transitioning economy is provided, and the two fraud cases reveal the complexities of the business environment in Vietnam. Originality/value This research gives voice to the tensions that developing countries are confronting as they seek to balance external pressures with internal constraints. The introduction of an assemblage of three theoretical lenses enables insights into contemporary issues associated with applying FVA in such settings.

scholarly journals Sensitivity of economic policy uncertainty to investor sentiment

2019 ◽  
Vol 36 (2) ◽  
pp. 114-129 ◽  
Author(s):  
Mobeen Ur Rehman ◽  
Nicholas Apergis
Keyword(s):  
Economic Policy ◽  
Investor Sentiment ◽  
Policy Uncertainty ◽  
Momentum Effect ◽  
Control Variables ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Investor Sentiments ◽  
International Investors ◽  
The Impact

Purpose This paper aims to explore the impact of investor sentiments on economic policy uncertainty (EPU). The analysis also considers the momentum effect, stock market returns volatility and equity pricing inefficiencies across markets, which, to the best of the authors’ knowledge, has not been addressed in the literature. The role of these control variables has collectively been considered to have important behavioral implications for international investors Design/methodology/approach Quantile regressions are used for estimation purpose, as it provides robust and more efficient estimates rather than those coming from the traditional regression model. Findings The momentum effect is negative and significant only at higher quantiles, while oil prices are positive and significant across all quantiles. The exchange rate exerts a negative and significant effect on EPU, whereas equity price volatility (i.e. investor sentiment) exerts a negative and significant impact on EPU in most of the quantiles. Research limitations/implications The results have important implications for international investors and policymakers, especially in terms of the breakdown of economic policy uncertainty across different sample markets. The breakdown of complete sample period into sub-samples acts as a robust analysis and documents the similarity of the results for the Asian and developed markets cases, but not in the case of the European markets. Practical implications The findings imply the importance of financial stability that impacts the accumulation of systemic risks and adds smoothness to the financial cycle in particular geographical areas. Originality/value The contribution of this paper is threefold. First, existing literature highlights and empirically tests the impact of economic policy uncertainty on different market, macro-economic and global control variables. The analysis, however, performs it in the reverse order, i.e. analyzing the impact of the momentum effect (investor sentiment variables), equity market inefficiencies and volatility (market variables) and exchange rates and Brent oil (control variables). Second, to check the sensitivity of economic policy uncertainty, the analysis analyzes a wide range of markets, segregated as emerging, developed and European regions over the sample period to generate region-wise implications. Finally, the analysis explores the relationship of aforementioned variables with economic policy uncertainty keeping in view the non-linear structure and prior evidence and investor sentiments and economic policy uncertainty in the regression model.

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