Title

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

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

Publisher Statement

Copyright © 2012 Elsevier Ltd.

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Full-text Version

Publisher’s Version

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