We document the drop of firm-level corporate investment in the year of periodical Five-Year Plan alteration,whereas strong local government intervention can erase the reduction of investment *** a sample of Chinese li...
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We document the drop of firm-level corporate investment in the year of periodical Five-Year Plan alteration,whereas strong local government intervention can erase the reduction of investment *** a sample of Chinese listed firms between 1998 and 2012,we document that relative to the average value of investment rate during the whole sample period,firms reduce investment rate by more than 20%in the year of Five-Year Plan *** also find that the reduction of investment expenditure is statistically significant in the industries sensitive to Five-Year Plan change,which is consistent to our hypothesis that industry policy uncertainty caused by Five-Year Plan change leads to the drop of investment ***,the investment rate of SOEs in the area with strong government forces doesn’t change significantly in the period of Five-Year Plan change,which shows that for the GDP consideration,local government can intervene corporate behavior through SOE it controlled,and thus prevent from investment reduction.
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