The investment environment and firm investment behavior of listed companies in China: An empirical study on the effect of government ownership

チュウゴク ジョウジョウ キギョウ ノ トウシ コウドウ ヒ キンユウギョウ ニオケル セイフ シハイ ノ エイキョウ ブンセキ

中国

移行経済

G32

G38

O16

Public enterprise's management problems are well known. The modern corporate system reforms of state-owned enterprises in China are thought to be aimed at improving governance. However, a large percentage of the total listed companies in China are state-controlled companies (government holds a majority of shares) that have not been completely privatized. Recent research pointed out that state-control influences the corporate financing behavior in China. Based on the fact that financial structure affects investment behavior, it is possible that state-control influences corporate investment behavior. As far as we know, it is not clear how state-control impacts investment behavior.The aim of this paper is to clarify the effect of state control on investment behavior. Based on the corporate system and share structure of China's listed companies, we classify all samples into state-controlled company groups and non-state-controlled company groups, and analyze the determinants of investment in China's listed companies by estimating a simultaneous equation model with 3SLS. In this model, we treat investment ratio, debt ratio and investment opportunity as endogenous variables.The result of our analysis shows that financial structure affects firm's investment ratio and this effect is different from the effect in other countries. In addition, we find state-control effect on investment ratio. These results indicate that China's state-owned enterprises reforms and development of capital markets are at the halfway stage yet.