The Impact of Government Intervention on Corporate Investment Allocations and Efficiency: Evidence from China

Ying Hao; Jing Lu

doi:10.1111/fima.12188

journal article Nov 24, 2017

The Impact of Government Intervention on Corporate Investment Allocations and Efficiency: Evidence from China

Ying Hao

Jing Lu

Financial Management Vol. 47 No. 2 pp. 383-419 · Wiley

View at Publisher Save 10.1111/fima.12188

Abstract

AbstractWe examine whether government intervention plays an important role in determining corporate investment allocations and efficiency in China. We find the government tends to intervene to promote corporate investment in fixed assets, equity in other state‐owned enterprises (SOEs), and natural resources including oil, natural gas, and mines, but reduces research and development (R&D) investment. However, the effects of government intervention on these investment allocations are primarily found in local SOEs rather than in central SOEs or in private enterprise. Government intervention also induces a crowding‐out effect in natural resource investments of private firms, suggesting that government intervention distorts investment allocations and reduces investment efficiency.

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Metrics

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Citations

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References

Details

Published: Nov 24, 2017
Vol/Issue: 47(2)
Pages: 383-419
License: View

Authors

Department of Molecular and Human Genetics, Baylor College of Medicine, Houston, TX 77030, USA.

Funding

National Natural Science Foundation of China Award: 71372137

Cite This Article

Ying Hao, Jing Lu (2017). The Impact of Government Intervention on Corporate Investment Allocations and Efficiency: Evidence from China. Financial Management, 47(2), 383-419. https://doi.org/10.1111/fima.12188

The Impact of Government Intervention on Corporate Investment Allocations and Efficiency: Evidence from China

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