Economic policy uncertainty, social network, and the cost of corporate debt

ABSTRACT

This paper is the first to construct social network indicators that bring together the individual and organizational levels to examine how social networks can moderate the adverse effects of EPU on corporate finance. An empirical study of Chinese A-share listed firms from 2007–2018 shows that the corporate debt costs of firms with a better social network are less exposed to a poor economic policy uncertainty environment relative to firms with a poor social network, and the results pass a series of robustness tests.

KEYWORDS:

• Social networks
• composite networks
• centrality
• economic policy uncertainty (EPU)
• corporate debt cost

JEL CLASSIFICATION:

• G18
• G32
• G39
• L14
• M41

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by the National Natural Science Foundation of China [72262023] and College Humanities and Social Sciences in Jiangxi Province[JJ20207]