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Government GDP targets and corporate capacity expansion – Empirical evidence based on A-share listed companies

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  • Wang, Yanping
  • Yang, Shitian
  • Tang, Weizheng
  • Wei, Li

Abstract

The phenomenon of Chinese-style capacity expansion is widespread and closely tied to the interventionist behavior of local governments. Using data from A-share listed companies between 2010 and 2021, we find a significant correlation between economic growth targets and corporate capacity expansion. The impact of growth targets on capacity expansion is more pronounced during the National Party Congress, when officials use stricter constraints and when the municipal party secretary is around 55 years old. Officials influence capacity decisions by allocating key resources such as land and finances. We provide valuable insights into Chinese-style capacity expansion, offering reference significance for promoting China's supply-side structural reform.

Suggested Citation

  • Wang, Yanping & Yang, Shitian & Tang, Weizheng & Wei, Li, 2024. "Government GDP targets and corporate capacity expansion – Empirical evidence based on A-share listed companies," International Review of Financial Analysis, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005641
    DOI: 10.1016/j.irfa.2023.103048
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