Economics at your fingertips  

How to explain corporate investment heterogeneity in China's new normal: Structural models with state-owned property rights

Jinchuan Shi and Xiaoqian Zhang

China Economic Review, 2018, vol. 50, issue C, 1-16

Abstract: This paper studies corporate investment and its structural change by the view of state-owned property right. By constructing dynamic investment decision-making model, we find corporate investment heterogeneity in China due to their different dynamic shifts of objective functions, demonstrated by our simulations. Empirical tests imply that the expansion of investment improves financial performance, but does not play a positive role on solving social employment. POEs expanded investment much more than SOEs did, even in the transitional period, but both of them reduced their investment significantly in new normal. Mechanisms are explored by 3-stage structural models for non-matched control group and nearest neighbor PSM matched control group. Although investment inefficiency of SOEs are concerned, executive stock ownership and equity finance could be exotic methods to stimulate efficient investment. Investment efficiency of POEs has been recovered in new normal but POEs have shifted away from ‘profit-driving’ they used to be in the old normal.

Keywords: State-owned property rights; Financial crisis; Investment (search for similar items in EconPapers)
JEL-codes: G15 G21 G32 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

DOI: 10.1016/j.chieco.2017.10.005

Access Statistics for this article

China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

More articles in China Economic Review from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

Page updated 2021-03-09
Handle: RePEc:eee:chieco:v:50:y:2018:i:c:p:1-16