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SSRN
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Expropriation Risk and Investment: A Natural Experiment

SSRN Electronic Journal
2023
  • 2
    Citations
  • 1,282
    Usage
  • 1
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    2
    • Citation Indexes
      2
  • Usage
    1,282
    • Abstract Views
      1,018
    • Downloads
      264
  • Captures
    1
    • Readers
      1
      • SSRN
        1
  • Ratings
    • Download Rank
      232,095

Article Description

This paper uses the enactment of China’s 2007 Property Law (the Law), which reduces the risk of expropriation by local governments, as the setting to investigate the importance of property rights protection for private firm investment. Using propensity score matching and a difference-in-differences design, we find that firms facing weaker property rights protection prior to the Law significantly increase their investment and investment efficiency after the Law. Cross-sectional analyses document evidence consistent with a decrease in firms’ perceived expropriation risk as the main mechanism underlying the Law’s effect. Finally, we show that the Law improves local economic outcomes and employment.

Bibliographic Details

Siddharth M. Bhambhwani; Hui Dong; Allen Huang

Elsevier BV

Property Rights; Expropriation Risk; Investment; Investment Efficiency; Employment; Legal Institutions; China

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