Fiscal decentralization and multinational firms’ ownership: evidence from China

Shih-Ying Wu () and Mei-Jane Teng ()

Economics of Governance, 2012, vol. 13, issue 3, 237-262

Abstract: China’s fiscal decentralization increases the incentive for local governments to maintain economic prosperity and improve institutional environments for multinational firms. This study investigates the impact of fiscal decentralization on the ownership shares of multinational firms in China. Multinational firms located in regions with higher degrees of fiscal decentralization are found to own larger shares of their foreign subsidiaries. This result is consistent under various robustness checks, including instrumental variables estimations. The finding suggests that multinational firms respond to local fiscal decentralization by increasing their participation in investment. This study therefore provides additional evidence for the beneficial effect of fiscal decentralization on China’s economic growth by highlighting the risk-mitigating role of fiscal decentralization. Copyright Springer-Verlag 2012

Keywords: Fiscal decentralization; Institutional environment; Multinational firm; Entry mode; H71; H73; O24 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10101-012-0108-8 (text/html)
Access to full text is restricted to subscribers.

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:spr:ecogov:v:13:y:2012:i:3:p:237-262

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10101/PS2

DOI: 10.1007/s10101-012-0108-8

Access Statistics for this article

Economics of Governance is currently edited by Amihai Glazer and Marko Koethenbuerger

More articles in Economics of Governance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().