Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China
We investigate the impact and mechanism of industrial policy on corporate investment and investment efficiency. Using the micro-level data of A-share listed firms on China’s stock market from 2001–2020, we examine whether industrial policies have different effects on China’s state-owned enterprises...
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| Veröffentlicht in: | Sustainability 2023-01, Vol.15 (1), p.732 |
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| creator | Wang, Ting Wang, Rujun Zhang, Hua |
| description | We investigate the impact and mechanism of industrial policy on corporate investment and investment efficiency. Using the micro-level data of A-share listed firms on China’s stock market from 2001–2020, we examine whether industrial policies have different effects on China’s state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). Moreover, we identify specific policy followers to further illustrate the impact of industrial policy on investment efficiency. The empirical results show that industrial policies promote investments among non-SOEs at the cost of reducing their investment efficiency, but have no effect on the investment and efficiency of SOEs. Government subsidy and inter-industry competition are the main mechanisms for the negative impact of industrial policy on investment efficiency. Moreover, target industrial policies reduce the investment efficiency of both SOE and non-SOE policy followers. Therefore, to achieve the goal of improving corporate investment efficiency and promoting sustainable economic development, policy-makers should pay more attention to the consequence of unnecessary government subsidy and excessive inter-industry competition. |
| doi_str_mv | 10.3390/su15010732 |
| format | Article |
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Evidence from China</title><source>MDPI - Multidisciplinary Digital Publishing Institute</source><source>EZB-FREE-00999 freely available EZB journals</source><creator>Wang, Ting ; Wang, Rujun ; Zhang, Hua</creator><creatorcontrib>Wang, Ting ; Wang, Rujun ; Zhang, Hua</creatorcontrib><description>We investigate the impact and mechanism of industrial policy on corporate investment and investment efficiency. Using the micro-level data of A-share listed firms on China’s stock market from 2001–2020, we examine whether industrial policies have different effects on China’s state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). Moreover, we identify specific policy followers to further illustrate the impact of industrial policy on investment efficiency. The empirical results show that industrial policies promote investments among non-SOEs at the cost of reducing their investment efficiency, but have no effect on the investment and efficiency of SOEs. Government subsidy and inter-industry competition are the main mechanisms for the negative impact of industrial policy on investment efficiency. Moreover, target industrial policies reduce the investment efficiency of both SOE and non-SOE policy followers. Therefore, to achieve the goal of improving corporate investment efficiency and promoting sustainable economic development, policy-makers should pay more attention to the consequence of unnecessary government subsidy and excessive inter-industry competition.</description><identifier>ISSN: 2071-1050</identifier><identifier>EISSN: 2071-1050</identifier><identifier>DOI: 10.3390/su15010732</identifier><language>eng</language><publisher>Basel: MDPI AG</publisher><subject>Business ; Capital investments ; China ; Competition ; Economic development ; Efficiency ; Funding ; Government subsidies ; Hypotheses ; Industrial policy ; Investment policy ; Macroeconomics ; Market entry ; Politics ; Profits ; Social change ; Subsidies ; Sustainability ; Sustainable development</subject><ispartof>Sustainability, 2023-01, Vol.15 (1), p.732</ispartof><rights>COPYRIGHT 2022 MDPI AG</rights><rights>2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). 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Evidence from China</title><title>Sustainability</title><description>We investigate the impact and mechanism of industrial policy on corporate investment and investment efficiency. Using the micro-level data of A-share listed firms on China’s stock market from 2001–2020, we examine whether industrial policies have different effects on China’s state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). Moreover, we identify specific policy followers to further illustrate the impact of industrial policy on investment efficiency. The empirical results show that industrial policies promote investments among non-SOEs at the cost of reducing their investment efficiency, but have no effect on the investment and efficiency of SOEs. Government subsidy and inter-industry competition are the main mechanisms for the negative impact of industrial policy on investment efficiency. Moreover, target industrial policies reduce the investment efficiency of both SOE and non-SOE policy followers. 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| ispartof | Sustainability, 2023-01, Vol.15 (1), p.732 |
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| language | eng |
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| source | MDPI - Multidisciplinary Digital Publishing Institute; EZB-FREE-00999 freely available EZB journals |
| subjects | Business Capital investments China Competition Economic development Efficiency Funding Government subsidies Hypotheses Industrial policy Investment policy Macroeconomics Market entry Politics Profits Social change Subsidies Sustainability Sustainable development |
| title | Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China |
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