In contrast to recent studies using U.S. data, we find a positive relation between product market competition and corporate investment using a sample of Chinese manufacturing firms during 1999-2010. A quasi-natural experiment and change regressions yield consistent evidence. We contend that China’s high growth rate, as it transitions from a developing economy to a developed economy, is what drives the positive relation between competition and investment. We directly test and provide support for this growth-oriented explanation. We also find that high investment under high competition is a value-enhancing proposition for firms. Finally, we also test to see if there are some firm-types that are more likely to invest under high competition in a growing economy, and we find that firms with high predation risk, firms that are industry leaders, and firms with good governance are the ones that invest more.
Keywords: product market competition; corporate investment; China
학회소식
공지사항
[2015년 제 2차] Product market competition and corporate investment
작성자 : 관리자
조회수 : 821
게시일 :
2015-06-03