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Do CEOs Know Best? Evidence from China

Nicholas Bloom, Hong Cheng, Mark Duggan, Hongbin Li, Franklin Qian, Jan 30, 2019

Using data from the China Employer-Employee Survey (CEES), a recent survey of Chinese manufacturing firms, we analyze the extent to which employees of differing levels are able to assess their firms’ management practices. Our study finds that of CEOs, managers, and workers, CEOs tend to have the most accurate appraisals of their firms. Additionally, we find that firms with higher levels of disagreement...

Industrial Policy: Lessons from China

Panle Jia Barwick, Myrto Kalouptsidi, Nahim Bin Zahur, Sep 18, 2019

This paper examines an important industrial policy in China in the 2000s that aims to propel the country's shipbuilding industry to the largest globally. Using comprehensive data on shipyards worldwide and a dynamic model of firm entry, exit, investment, and production, we find that the scale of the policy was massive and boosted China's domestic investment, entry, and world market share dramatically. On the other hand, it created sizable distortions and led to increased industry fragmentation and idleness.

China’s Impact on Global Financial Markets

Isha Agarwal, Grace Weishi Gu, Eswar Prasad, Dec 18, 2019

China has been shifting the composition of its external assets from accumulation of foreign reserves toward private, nonofficial outflows. This article provides an overview of the allocation patterns of outward equity investment by Chinese institutional investors (IIs) across destination countries and sectors. In their foreign portfolios, Chinese IIs overweight sectors in which China has a comparative disadvantage (for instance, computer software), and they concentrate...

The Impact of Corporate Taxes on Firm Innovation: Evidence from the Corporate Tax Collection Reform in China

Jing Cai, Yuyu Chen, Xuan Wang, Dec 19, 2018

We explore a tax reform on manufacturing firms in China in order to study the impact of taxes on firm innovation. The reform switched corporate income tax collection from a local to state tax bureau and reduced the effective tax rate by 10 percent. The reform only applied to firms established after January 2002, allowing us to use a regression...

In Rural China, Gift-Giving Is an Increasingly Costly Competition

Erwin Bulte, Ruixin Wang, Xiaobo Zhang, May 01, 2019

Gift expenditures grow swiftly in rural China and may adversely affect people's welfare. While gift-giving helps to maintain social status and connections, gift competition may create a predicament: people must spend more and more to "keep up with the Joneses." As a result, the escalating gift expenses crowd out spending on other important consumption and become increasingly burdensome to people in rural areas, particularly to the poor.