Government intervention and firm investment: Evidence from international micro-data

Chen Lin and Sonia Man-lai Wong

Journal of International Money and Finance, 2013, vol. 32, issue C, 637-653

Abstract: Building on the important study by Beck et al. (2005), we examine how government intervention in firms' decision-making is related to their investment and sales growth. Using the unique World Bank dataset (WBES) covering 6500 firms in 70 countries, we find strong evidence that the extent of government intervention in firms' investment, employment, sales, pricing, dividend, and merger and acquisition decisions is negatively related to their investment and sales growth, with the effect being more profound in foreign owned firms and less significant in state-owned firms. The empirical results are robust to a series of robustness tests and instrumental variable regressions.

Keywords: Firm investment; Government intervention; International evidence (search for similar items in EconPapers)
JEL-codes: G31 G32 G38 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:32:y:2013:i:c:p:637-653

DOI: 10.1016/j.jimonfin.2012.06.002

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