The rise of market power and firms' investment: Evidence from China

Bowen Zheng, Mengjie Zhang and Xuefang Zhang

Accounting and Finance, 2022, vol. 62, issue 5, 4807-4830

Abstract: Following De Loecker et al. (2020) we characterise the evolution of market power based on listed firm data in the Chinese economy from 2000 to 2019. The increase is mainly driven by a few superstar firms. In addition, we find strong evidence of an inverted U‐shape relation between market power and investment. Increasing market power encourages competing firms to invest in beating the competition but discourages firms from investing in an unequal economy because of the decline in investment payoffs. These findings indicate that the superstar firm effect harms investment, resulting in a potential decline in the economic growth rate.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/acfi.12990

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:62:y:2022:i:5:p:4807-4830

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().