Government intervention and firm investment : evidence from international micro-data

Research output: Journal PublicationsJournal Article (refereed)peer-review

24 Citations (Scopus)


Building on the important study by Beck et al. (2005), we examine how government intervention in firms' decision-making is related to their investment and sales growth. Using the unique World Bank dataset (WBES) covering 6500 firms in 70 countries, we find strong evidence that the extent of government intervention in firms' investment, employment, sales, pricing, dividend, and merger and acquisition decisions is negatively related to their investment and sales growth, with the effect being more profound in foreign owned firms and less significant in state-owned firms. The empirical results are robust to a series of robustness tests and instrumental variable regressions.
Original languageEnglish
Pages (from-to)637-653
Number of pages17
JournalJournal of International Money and Finance
Early online date22 Jun 2012
Publication statusPublished - Feb 2013

Bibliographical note

The authors gratefully acknowledge financial support from the HKSAR Government (GRF 147810) and Chinese University of Hong Kong.


  • Firm investment
  • Government intervention
  • International evidence

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