Impact of Excessive Government Regulation on Firm Performance——Evidence from the First-hand Survey of 570 Manufacturing Firms in China-质量院英文网
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Impact of Excessive Government Regulation on Firm Performance——Evidence from the First-hand Survey of 570 Manufacturing Firms in China

April 7, 2016

YANG Zhiqing1, 2, ZHANG Kai1, ZHENG Weihua1

1. Institute of Quality Development Strategy,Wuhan University,Wuhan 430072,China;

  Macro-quality Management Collaborative Innovation Center in Hubei Province,Wuhan 430072,China;

2. School of Political Science and Public Administration,Wuhan University,Wuhan 430072, China


Abstract: In order to investigate the scale,cost and the impact on firm performance of the current governmentregulation,we use the first-hand survey data of China’s manufacture firms to analyze.The result shows that 55.26 percent of the firms received various government regulation.Among them,the government’s subsidy regulation accounts for 11.05% of firms’revenue,and more concentrates in state-owned enterprises and large enterprises,while the government fees accounts for 6.98 percent of firms’costs,and more concentrates in private enterprises and SMEs. Empirical test shows that,government regulation has a significant negative impact on firm performance.The reason is that the current government regulation behavior appeared excessive interference phenomenon,which affects the effect of government regulation. Therefore,we propose the following policy recommendations: making good use of market-based instruments rather than direct intervention in the market; gradually withdrawing from the competitive field; establishing evaluationmechanisms to control government behavior and dynamically adjust the government regulation policy as well;improve relevant laws and regulations to cutback the problem of arbitrariness and unaccountability.


Key words: government regulation; firm performance; excessive regulation