State control, access to capital and firm performance

Oliver Zhen Li (First Author), Xijia Su (Participant Author), Zhifeng Yang (Participant Author)

Research output: Contribution to journalJournal


We study the effect of state control on capital allocation and investment in China, where the government screens prospective stock issuers. We find that state firms are more likely to obtain government approval to conduct seasoned equity offerings than non-state firms. Further, non-state firms exhibit greater sensitivities of subsequent investment and stock performance to regulatory decisions on stock issuances than state firms. Our work suggests that state control of capital access distorts resource allocation and impedes the growth of non-state firms. We also provide robust evidence that financial constraints cause underinvestment.
Original languageEnglish
Pages (from-to)101-125
JournalChina Journal of Accounting Research
Issue number2
Publication statusPublished - 2012

Corresponding author email


  • Access to capital
  • Firm growth
  • Regulation
  • State control

Indexed by

  • ABDC-C


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