Government intervention and corporate policies: Evidence from China

Yingying Shao, Rodrigo Hernández and Pu Liu

Journal of Business Research, 2015, vol. 68, issue 6, 1205-1215

Abstract: This study examines two channels through which Chinese government intervenes in business activities: direct intervention via government ownership and indirect intervention via strategic development plans in selected areas. The findings show that these interventions affect corporate policies differently and have opposite effects on financing policies: while firms with higher level of government ownership tend to use higher leverage, more long-term debt and hold less cash, and such effects are more pronounced with central government ownership, reverse effect is related with strategic development plans. In addition, the study shows that indirect intervention alleviates the impact of direct intervention on firms' financing policy. In terms of investment policies, both forms of intervention are related to higher investment expenditures and poorer performance. The effect of government ownership on firms' leverage has become less significant after the establishment of corporate bond market in China.

Keywords: Government intervention; Ownership structure; Financial structure; Investments (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296314003580
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: https://EconPapers.repec.org/RePEc:eee:jbrese:v:68:y:2015:i:6:p:1205-1215

DOI: 10.1016/j.jbusres.2014.11.015

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().