Abstract

AbstractDoes state fiscal monitoring of local governments impact firms? Exploiting the staggered adoption of state fiscal monitoring policies, our results show that state fiscal monitoring of local governments increases corporate investment. Affected firms increase their investment by increasing capital expenditures as well as research and development expenditures. Additional analyses reveal that firms fund this increase in investment by decreasing share repurchases and issuing debt. We also provide evidence that the increase in corporate investment is driven by a reduction in local corruption.

Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call