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Government Intervention and Investment Comovement: Chinese Evidence
Author(s) -
Chen Donghua,
Khan Saqib,
Yu Xin,
Zhang Zhou
Publication year - 2013
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/jbfa.12022
Subject(s) - intervention (counseling) , investment (military) , government (linguistics) , monetary economics , economic interventionism , business , sample (material) , foreign direct investment , economics , macroeconomics , politics , psychology , linguistics , philosophy , chemistry , chromatography , psychiatry , political science , law
This study examines whether government intervention affects corporate investment comovement, and whether this impact varies across firms with different types of ownership. We use a large Chinese sample to investigate these questions, and perform a regional as well as firm‐level analysis. We show that government intervention is positively and significantly associated with investment comovement. We also find that the impact of government intervention on investment comovement is higher and more significant for state‐owned firms than for domestic private and foreign firms. Finally, we show that investment comovement hinders corporate performance for state‐owned and domestic private firms but not for foreign firms.