Targeted poverty alleviation and corporate investment in poor counties: an empirical analysis from the geographical distribution of new subsidiaries of listed firms

Bofu Deng, Taiwei Wang, Cunjie Tao and Li Ji

China Journal of Accounting Studies, 2024, vol. 12, issue 1, 47-70

Abstract: Location is key to corporate investment decisions. Many studies have examined firms' investment in regions with sound institutional environments, but little is known about their investment in poor regions. This paper examines the impact of Targeted Poverty Alleviation (TPA) on firms’ investment in poor regions using listed firms from 2007 to 2021. It finds that TPA mainly guides resource-dependent and labour-intensive firms to invest in poor regions through subsidiaries. Further analysis shows that firms establish subsidiaries in poor regions actively, not passively motivated by administrative orders. The heterogeneity analysis shows that, the higher the land and labour prices in firms’ location, the more likely they are to establish subsidiaries in poor regions. Signalling and resource effects are the main drivers of firms’ investment in poor regions. This paper provides evidence for the effectiveness of TPA and implications for firms to achieve common prosperity..

Date: 2024
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DOI: 10.1080/21697213.2023.2274569

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