Does the administrative approval reform impact firm's investment decisions?

Bo Cheng, Zhuming Guo, Ting Xiong and Baoyin Qiu

International Review of Economics & Finance, 2023, vol. 88, issue C, 1052-1067

Abstract: By leveraging the quasi-natural experiment of the "Without the Need for a Second Trip" reform in Zhejiang province, China, in 2016, this paper examines the impact of government examination and approval reform on corporate investment decisions. We find that the firm's investment level has increased by about 2 times after the government examination and approval reform than that before the reform. The result remains after a series of robustness tests. Our evidence suggests that increased government efficiency has significantly increased the sensitivity of firm investment and investment opportunities. Further analysis shows that the government examination and approval reform has created a favorable business environment for firm investment, which reduces the information cost of firm investment and enhances the flexibility of corporate investment decision making.

Keywords: Government examination and approval reform; Investment decisions; Government efficiency; Business environment (search for similar items in EconPapers)
JEL-codes: E52 G31 G32 M41 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:88:y:2023:i:c:p:1052-1067

DOI: 10.1016/j.iref.2023.07.034

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