Abstract
This study evaluates the asymmetric impact of international oil price uncertainty on firms’ investment in China using a sample of listed renewable energy firms over the period 2000-2017 based on the fixed effect model. The empirical results show that the coefficient of oil price uncertainty on corporate investment is significantly negative, and it significantly affects corporate investment efficiency. Further, it reveals that from the total sample, no matter whether the oil price rises or falls, or the oil price is higher or lower, there is no asymmetry. However, after grouping companies according to the average investment opportunity, we found that for companies with better investment opportunities, the effect of oil price uncertainty on investment is asymmetric, since the coefficient of the the interaction term between high oil prices and oil price uncertainty is significant positive. It also shows that increasing oil price uncertainty will reduce the investment efficiency of companies with poor investment opportunities, and the results of regression using inefficient investment as the explanatory variable also confirm this. Sale capital ratio, firm size, firm age and administrative expense ratio are also vital factors in determining renewable energy firms’ investment. This study has important policy implications for both government and enterprise.
Highlights
In recent years, in order to solve its energy shortage problem and relieve the pressure of environmental pollution, the renewable energy sector in China was strongly encouraged by the government, and several supporting measures and regulatory guidelines have been introduced
We examine the response of corporate investment to the uncertainty of oil prices, especially considering the possible asymmetric effects
The most obvious finding to emerge from this study is that the increasing in oil prices uncertainty have a significant negative impact on investment in China’s renewable energy companies, and it significantly affects corporate investment efficiency
Summary
In order to solve its energy shortage problem and relieve the pressure of environmental pollution, the renewable energy sector in China was strongly encouraged by the government, and several supporting measures and regulatory guidelines have been introduced. The uncertainty of oil prices can lead to uncertainty in demand for renewable energy products due to the partial substitution relationship between fossil energy and renewable electricity From this perspective, it may bring some other changes for the companies, such as inefficient corporate investment behavior. The article compares the impact of oil price uncertainty on investment when oil prices rise or fall, and when oil prices are high or low It investigates the different responses of companies with different investment opportunities to oil prices uncertainty. Our empirical results contributes to the growing body of literature by providing evidence that oil price uncertainty has an asymmetric impact on corporate investment of renewable energy firms and rise in oil price volatility will increase the possibility of over-investment. Statistical description.; Section Empirical Results reports the empirical regression results; and Section Conclusion summarizes and concludes
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
