COVID-19’s sudden outbreak and the subsequent lockdown imposed by the government substantially changed China’s business environment. In a survey of 1,182 company executives in China, state-owned enterprises (SOEs) reported less business reductions under COVID-19. This paper examines if SOEs’ superior performance was resulted from government support rather than innate ability to cope with COVID-19. While firm-level government support is unobservable, the outbreak saw companies responding with various salary and personnel measures, which give us information to construct a proxy for the government-support effect. After controlling for the government-support effect, we find that SOEs performed significantly worse in the pandemic period.
China Europe International Business School (CEIBS)