Li Qingyuan Published a Paper Entitled “Political Investment Cycles of State-Owned Enterprises” in The Review of Financial Studies

"Political Investment Cycles of State-owned Enterprises", a paper written by Professor Li Qingyuan from the School of Economics and Management, was officially published online byThe Review of Financial Studies, an international journal of finance.

This is another paper published by Li Qingyuan in recent years after publishing papers inThe Accounting ReviewandContemporary Accounting Research. The paper was completed by Li Qingyuan in collaboration with Professor Lin Chen of the University of Hong Kong and Professor Xu Li of the Washington State University.The Review of Financial Studiesis one of the three major international financial journals published by Oxford University Press for the American Academy of Financial Management.

The paper validates for the first time the hypothesis that political goals lead to the inefficiency of state-owned enterprises from the perspective of political elections, and supplements and expands the research on the correlation between political uncertainty and corporate investment in the international academic community.

Abstract

Using a large panel of more than 140,000 state-owned enterprises (SOEs), this study examines SOEs' investment behavior surrounding 82 national elections in 25 European countries between 2001 and 2015. We find that SOEs increase their corporate investment by about 29% of the Sample average during national election years. This effect is more pronounced in countries and low-volume quality, more centralized political systems, and state-controlled banking systems. In contrast, we find the Matched non-SOEs significant decrease their corporate investment during national election years.

Paper link: https://academic.oup.com/rfs/advancearticle/doi/10.1093/rfs/hhz090/5568310