The Chinese‐style macroeconomic control: The role of state‐owned enterprises

Abstract

This paper extends the existing studies of cyclical fiscal policy by providing the first systematic theoretical and empirical study of cyclical quasi‐fiscal investment of state‐owned enterprises (SOEs) in China. Using data from Chinese listed companies and the System GMM method, the results show that: (1) both central and local SOEs exhibit expansion‐biased investment behaviours; (2) the expansion‐biased investment of central SOEs mainly goes to the tertiary industry and the western regions of China, while the expansion‐biased investment of local SOEs mainly occurs in the tertiary industry and the middle and western regions of China; (3) during the economic recession, the higher the local growth targets, the more bank credit central and local SOEs can obtain, and the more pronounced the expansion‐biased investment. The study shows that apart from the countercyclical fiscal policy implemented by central and local governments, the quasi‐fiscal function of central and local SOE investments is also key for the Chinese economy to quickly recover from recessions.

Do CEOs Who Are Raising Daughters Reduce Company Risk‐taking?*

“…Grouping analyses on the patriarchal culture of CEO birthplace and CEO education. Given China's Confucian culture, the patriarchal concept is deeply rooted in China (Wang et al 2021b) and is prevalent nationwide. However, differences in patriarchal level still exist across regions in China (Li et al 2011).…”

“…China's distinctive cultural and institutional background provides a unique setting for examining the impact of offspring gender on corporate risk-taking. China has a profound accumulation of "family culture" (Wang et al 2021b). Most Chinese parents prioritize their children's needs and the parent-child relationship over other social relationships.…”

Unlocking the myths of size expansion in China's large state‐owned enterprises: Theory and evidence

“…To reveal the monopolized status of SOEs in key sectors of China's economy, this paper follows Gang and Hope (2013) to present their output ratio and the total assets ratio in selected industries in 1998 and 2017 in Table 1. SOEs occupy over 50% of firms in the industries of mining and washing of coal, extraction of petroleum and natural gas, manufacturing of tobacco, processing of petroleum, coking, and nuclear fuel, manufacturing of transport equipment, production and supply of electric power and heat power, and production and supply of water and gas.…”

Auditors’ response to earnings management after split-share structure reform in China

“…By the end of 1989, almost all SOEs had adopted the CMRS, which continued through 1993. However, given the increasing proportion of competitive non-SOEs in the Chinese economy, many SOEs were financially distressed and became significant burdens to the Chinese economy after the mid-1990s (Fan and Hope, 2013). As a result, the Chinese Government introduced Company Law on 1 July 1994 that allowed SOEs to register as companies with limited liability, giving SOEs more autonomy to operate the business.…”