Relationship Between Industrial Competition Environment And Business Growth Of Listed Enterprises

As is known to all,China is now experiencing a critical period of its economic development and the transformation as well as upgrading of the industrial structure.The structural reform puts emphasis on eliminating the zombie companies,which be regarded as one of the main factors that lead to backward production capacity through the regulation or the influence given by industrial policies.During the whole process of market clearing that aims at zombie companies,we found that enterprises suffered from financial distress might also be recognized as zombie companies just because these two kinds of enterprises share a common feature called sustained losses.Although the financial characteristic between enterprises with sustained losses and zombie companies seems very similar,it still cannot tell that all those enterprises with sustained losses would finally translate themselves into zombie companies.While at the same time,there do be some zombie companies that show no indication of financial distress.As a result,there might be a large number of enterprises with sustained losses that still have growing capacity and business ability be recognized as zombie companies by mistake if the identification of zombie companies simply relies on the financial indicators.However,zombie companies showing no indication of sustained losses would escape from elimination.These two results would do harm to both the efficiency of market clearing and the establishment of a sound industrial competition environment.This paper concentrates on the influence on the increase of business growth brought by outside environment and in order to analyze the relationship between the industrial competition environment and the growing capacity of enterprises with sustained losses stated with the basic theory of industrial policy,this paper firstly makes a judgment about the relationship among industrial policy,industrial environment and business growth with the help of literature analysis method and then establishes an empirical model using the standardized degree of operation and the intensity of support from industrial policies as quantification of industrial competition environment to further research the relationship between industrial competition environment and the business growth of listed enterprises.Both the theoretical and empirical results show that increasing the standardized degree of industrial operation or promoting the supporting intensity of government would do benefit to the improvement of industrial competition environment as well as the business growth of enterprises with sustained losses.The robustness check tests out what might be the change of business growth if enterprises with sustained losses be exposed in the industrial competition environment without the protection offered by industrial policies and the result verifies the reliability of the empirical results again.According to the inferences above,this paper suggests that a double-index identification system using both financial target and business growth as criteria of identification could be established to help recognize zombie companies and prevent those growing enterprises with sustained losses from being eliminated.In summary,only when the industrial policies concentrate on making a better industrial competition environment to help increase the business ability of its enterprises instead of directly interposing the market resources allocation should the industrial policy finish its desired target of regulating a fair competition order and improving the business growth of the enterprises in this industry.