Government intervention and firm investment : evidence from international micro-data
Document Type
Journal article
Source Publication
Journal of International Money and Finance
Publication Date
2-1-2013
Volume
32
First Page
637
Last Page
653
Publisher
Pergamon Press
Keywords
Firm investment, Government intervention, International evidence
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.
DOI
10.1016/j.jimonfin.2012.06.002
Print ISSN
02615606
E-ISSN
18730639
Funding Information
This work acknowledge financial support from the HKSAR Government (GRF 147810) and Chinese University of Hong Kong.
Publisher Statement
Copyright © 2012 Elsevier Ltd.
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Lin, C., & Wong, S. M. (2013). Government intervention and firm investment: Evidence from international micro-data. Journal of International Money and Finance, 32, 637-653. doi: 10.1016/j.jimonfin.2012.06.002