Transformations  in
Business & Economics

INFLUENCE OF ECONOMIC POLICY UNCERTAINTY ON ENTERPRISES' FINANCIAL INFORMATION DISCLOSURE
Jieqiong Wang, Xiao Zhang, Mingjie Dai

ABSTRACT. The present global economy is in a profound adjustment phase, with various risks and an increasingly complex and dynamic international situation. Thus, the government of different countries regulated their economic operating speed by frequently adjusting economic policies, which increased economic policy uncertainty. High economic policy uncertainty can exert adverse effects on the business and information environments of enterprises, which may engage in earnings management and illegal financial behaviours out of their own interest, thereby aggravating market information asymmetry. To explore the influence of economic policy uncertainty on the financial information disclosure of enterprises, data from Chinese A-share listed companies during the period of 2007 and 2018 and multiple linear regression models were utilized to analyse the influence of economic policy uncertainty on corporate financial information disclosure, the path mechanism, and heterogeneity. Results show that economic policy uncertainty lowers the earnings management level of enterprises, especially forward earnings management, and reduces the possibility of violative financial information disclosure. The bank loan level is an intermediary mechanism for economic policy uncertainty to influence enterprise earnings management and violative financial information disclosure, and bank loan cost is merely an intermediary path. The influence of economic policy uncertainty on enterprises' financial information disclosure varies with their internal governance level, institutional investor shareholding ratio, and profit and loss status. As economic policy uncertainty worsens, the research results can provide an important basis for investors' investment decision making, facilitate regulatory authorities' supervision of corporate financial information disclosure quality, and enrich the literature on the microeconomic consequences generated by economic policy uncertainty and microscopic influencing factors of corporate financial information disclosure and decision making.

KEYWORDS:  economic policy uncertainty, financial information disclosure quality, mediating effect, heterogeneous influence.

JEL classification:  G34, M41.