Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10226867 | Research in International Business and Finance | 2018 | 23 Pages |
Abstract
This paper investigates the relationship between government cost and firm value at the provincial level in a transitional economy. We shed further light on the question whether local government plays the role of grabbing or helping hand. We use a unique dataset covering government spending and corporate performance characteristics collected from provincial statistical yearbook and Datastream. The results show that there exists a nonlinear U-shaped relationship between local government cost and firm value. Particularly, the threshold value of provincial government spending is about 5%. Furthermore, the U-shaped nonlinear relationship is strongly evidenced in lower quantiles of firm value but not significant at high firm value quantiles, ceteris paribus. The article also offers an interesting result concerning the moderating role of state ownership. The effect of government cost on firm value is stronger for the state-owned firms at lower quantiles of firm value.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Dong Phong Nguyen, Xuan Vinh Vo, Thi Tuan Anh Tran, Thi Kim Thoa Tu,