Work

Social credit improvement and enterprise investment

Year: 2024

Type: article

Abstract: This research explores the effects of enhancing social credit on corporate investment, utilizing China's model city pilots for the Social Credit System Construction(SCSC) as a quasi-natural experiment. Our findings demonstrate that social credit improvement significantly increases enterprise investment levels, a conclusion supported by robustness tests. Mechanism analysis reveals that mitigating agency cost and enhancing debt financing are key factors driving increased corporate investment after the implementation of the SCSC. Heterogeneity results suggest that SCSC implementation is more effective for firms without political affiliation and with high institutional shareholding.

Source: Finance research letters

DOI: 10.1016/j.frl.2024.106355

Authors: Fei Ji, Weiming Liang, Xi Chen, Dongmin Kong

Institutions: Guangdong University of Foreign Studies, Huazhong University of Science and Technology

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,350