Economic policy uncertainty: A new firm-level measurement and impact on enterprise innovation strategies

This paper investigates the impact of the perception of economic policy uncertainty (PEPU) on enterprise innovation strategies. Using a text-based method and a sample of Chinese listed companies from 2007 to 2021, we find that PEPU negatively affects substantive and strategic innovations, and its negative impact on strategic innovations is more noticeable than that on substantive innovations. Mechanism analysis shows that PEPU affects enterprise innovation strategies through innovation investment and financing constraints. Moreover, enterprises with a high shareholding ratio of executives and private enterprises are more likely to suffer the negative impact of PEPU. Finally, analyst attention and internal control quality may weaken the inhibitory impact of PEPU on enterprise innovation strategies.