Abstract: This paper takes Shanghai and Shenzhen A-share listed companies from 2016 to 2020 as samples to analyze the impact of environmental uncertainty on corporate investment, and discusses the specific path mechanism and hedging mechanism. The study finds that environmental uncertainty weakens corporate fixed asset investment and R&D investment by increasing entity investment costs and cash flow volatility. Further analysis shows that environmental uncertainty will prompt companies to increase equity investment, worsen the investment structure, and lead to the shift from real economy to virtual economy . The hedging mechanism shows that government subsidies and tax incentives can effectively alleviate the negative impact of environmental uncertainty on corporate investment; in addition, internal control and management capabilities are also important measures to ensure effective corporate investment.
