Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China

We investigate the impact and mechanism of industrial policy on corporate investment efficiency. Using micro-level data A-share listed firms China’s stock market from 2001–2020, we examine whether policies have different effects state-owned enterprises (SOEs) non-state-owned (non-SOEs). Moreover, identify specific followers to further illustrate The empirical results show that promote investments among non-SOEs at cost reducing their efficiency, but no effect efficiency SOEs. Government subsidy inter-industry competition are main mechanisms for negative target reduce both SOE non-SOE followers. Therefore, achieve goal improving promoting sustainable economic development, policy-makers should pay more attention consequence unnecessary government excessive competition.