| Using the dataset of manufacturing enterprises in China Industry Business Performance Database,this paper mainly examines the effect of state-owned enterprises’(SOEs’)overinvestment,which is evaluated based on the economic value maximization rule,on local non-state-owned enterprises’(non-SOEs’)investment decisions.Overall,results suggest non-SOEs’investment increases significantly following local SOEs’overinvestment,especially for provinces where the SOEs experience more government intervention and provinces where the non-SOEs’ economy is well developed.Based on whether a SOE’s overinvestment can be predicted by the policy burden overloaded,this paper further examined the effect of different kinds of local SOEs’ overinvestment on local non-SOEs’investment.The results suggest that local SOEs’ overinvestment will promote non-SOEs’investment more significantly if SOEs’ overinvestment can be perfectly predicted by the extent of its policy burden.After that,this paper analyzes two important factors affecting the investment scale of private enterprises-growth opportunities and financing constraints,and further tests the specific effect mechanism of the investment driving effect above from the two perspectives.This paper first examined the potential effect of one mediator variable,namely the product market growth opportunity and it turns out that local SOEs’ overinvestment can lead to increases in growth opportunities of local non-SOEs,which finally promote non-SOEs’investment expenditures.Increases in non-SOEs’ product market growth opportunities mainly follow overinvestment of SOEs from the upstream industries and the downstream industries of supplying chains instead of the same industries.The positive effect of local SEOs’ overinvestment on non-SOEs’ product market growth opportunities is more significant for non-SOEs at the end of the supply chain and those not covered by supporting industry policies.As non-SOEs’ financial constraints are found to constrain their investment significantly,it is impossible for non-SOEs to increase their investment if they cannot solve this problem even though their product market growth opportunities increase following local SOEs’overinvestment.Therefore,this paper also investigated the potential measure of non-SOEs to support their investment decision and reduce the financial constraint problem.This paper found the inter-enterprise credit business of SOEs is helpful in easing local non-SOEs’financial constraints as it expands non-SOEs’ borrowing channels.The financial constraint liberation effect of SOEs’ inter-enterprise credit business is more significant in regions where the SOEs’ overinvestment is higher and regions where the degree of competition in financial market is lower.This paper has several contributions.First,findings in this paper complemented prior literature with a new dimension in evaluating SOEs’ investment efficiency.Second,findings of the support for non-SOEs’ product market growth opportunities,credit,and investment from local SOEs also highlight that there are not only contradictions between SOEs and nonSOEs as recorded in prior studies,but also opportunities of coexistence.Finally,findings of SOEs’ positive effect on local non-SOEs’ investment are also valuable in providing specific evidences of the special roles of SOEs in explaining the economic development miracle of our country in the past decades,which can also be used as a reference for other developing countries.As for the policy recommendations,this paper argues that SOEs’ overinvestment has positive spill-over effect on local non-SOEs’ investment and this effect is especially important for developing the pillar industries or emerging industries which are not mature enough to have enough investment from non-SOEs and for making up for market defect.However,with the maturity of industrial development and the continuous entry of social capital from non-SOEs,SOEs should transform into independent competitors and share the same competitive rules as non-SOEs in order to avoid negative consequences such as overcapacity in specific industries and overall industrial development imbalance.This paper thus argues that it is necessary to deepen the classified reform of state-owned enterprises according to the specific stage of market economy development. |
