Property rights security and firm survival: Micro-data evidence from China |
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| Institution: | 1. The School of Public Administration and Policy, Renmin University of China; Room 422A Qiushi Building, 59 Zhongguancun Street, Haidian District, Beijing 100872, PR China;2. The School of Economics, Central University of Finance and Economics, Room 1306 Main Building, 39 South College Road, Haidian District, Beijing 100081, PR China;3. International Finance Corporation, World Bank Group, 2121 Pennsylvania Ave NW, Washington, DC 20433, United States;4. The School of Economics and Management, Tsinghua University, Room 123 Weilun Building, 1 Tsinghua Park, Haidian District, Beijing 100084, PR China;1. Faculty of Education, Catholic University of Valencia, C/ Ramiro de Maeztu, 14, 46900 Torrent, Spain;2. Facultad de Ciencias Sociales, University of Castilla-La Mancha, Avenida de los Alfares, 44, 16071 Cuenca, Spain;1. School of Economics and Finance, Xi''an Jiaotong University, Xi''an, 710061, China;2. School of Public Economics and Administration, Shanghai University of Finance and Economics, Shanghai, 200433, China;3. National School of Development, Institute of Digital Finance, Peking University, Beijing, 100091, China |
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| Abstract: | The security of property rights has been found to play important roles in various aspects of firm behaviors. However, its effects on firm survival have been largely neglected in previous research. Using annual data of Chinese manufacturing firms over the period 1998–2008, we analyze the link between property rights security and firms' survival probabilities, differentiating firms into stated-owned enterprises (SOEs) and non-SOEs, and considering whether the linkage evolves over time. Examining a wide range of specifications, we find that the protection of property rights, by limiting government intervention and promulgating laws and rules, is crucial for firm survival. Moreover, better security of property rights benefits non-SOEs more. We also find that the beneficial effects of secure property rights on firm survival are more pronounced for years after 2003 when China speeded up deregulation to comply with its WTO commitments and reform target to establish a modern system of property rights than for years before 2002. |
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