The Impact of Economic Policy Uncertainty on Firm Performance: Based on a Study of Listed Manufacturing Companies

Policy uncertainty has created unprecedented challenges for businesses. Taking the A-share listed companies in Shenzhen and Shanghai from 2011 to 2022 as research samples, this paper examines the impact of economic policy uncertainty on firm performance and its mechanism. The results show that economic policy uncertainty can significantly inhibit the improvement of firm performance, and the conclusion is still valid after a series of robustness tests. The mechanism test shows that financing constraints and R&D investment are the important mediators of economic policy uncertainty inhibiting firm performance improvement. Heterogeneity test shows that the inhibitory effect of economic policy uncertainty on firm performance is more significant in private enterprises and enterprises with low ownership concentration. It provides theoretical support and practical guidance for enterprises' scientific decision-making and government's policy making.