Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China
Round 1
Reviewer 1 Report
Comments to Author/s
Thank you for the opportunity to review this manuscript draft. It is an important and interesting topic, and it does appear that the authors have novel and interesting results to report in term of investment both in sate owned and non-sate owned enterprises. . At the moment, it is probably of interest mainly to those who are empirically interested in China, though it does have some operational suggestions related to data especially others might find helpful.
To respect the time of Journal called upon to review the piece and to ensure the integrity of the journal, I would have expected more care to have been taken in editing before submission. That said, again, it’s an interesting piece with potential. What follows are comments on particular sections of the text:
Abstract is well written.
The Introduction part is a bit confusing in term of citation, like, in whole introduction part the author/s only provide 2 citations, for me which is a alarming. And author/s have mentioned in line 46 that “there are few studies” but no citation is given. Why
Further, regarding that govt polices, specifically China have changed its policies from time to time. Like, Green Investment policy in 2012, Executive Pay policy in 2014, China new normal economy policy in 2015 and corporate investment efficiency policy in 2015 for both SOE and non-SOEs. And I observed that author/s didn’t mention anything regarding corporate investment policy. Why
My concern is if China gave corporate investment policy in 2015 then why the author/s only include data from 2001-2015? Please explain with a solid proof
Further, why you didn’t check the impact of New Normal Policy? Explain Briefly
Literature section is nicely developed, chain and connected. But my only concern is that In Literature part the author/s mentioned in each Hypothesis regarding “Industrial policies” that those policy have positive or negative impact but my question is that what policies author/s are talking about? Are author/s taking about the policies given in 2015 which I mentioned above or some other policies? Explain
In data section, Report the descriptive stats of both SOEs and Non-SOEs (Table 2).
I suggest the author/s to read more literature regarding policies. For example;
Zhang, X., & Xu, L. (2021). Firm life cycle and debt maturity structure: Evidence from China. Accounting & Finance, 61(1), 937-976.
I have few questions, which author needs to address.
1. I am more interest to check the impact of CNNE (China new normal Economic Policy) and MEIC (Mass Entrepreneurship and Innovation Campaign), and for that author have to extend his dataset and do analysis again, and show the impact of these policy on industrial policies and investment efficency.
2. If author increase his data set up to 2020 then his results will be stronger. And I will recommend one paper and deeply study that paper because I think data from 2001-2006 is not important because most the policy came after 2005. So, I will suggest to include data from 2006-2020.
3. Further, regarding that govt polices, specifically China have changed its policies from time to time. Like, Green Investment policy in 2012, Pay policy in 2014, China new normal economy policy in 2015 and corporate investment efficiency policy in 2015 for both SOE and non-SOEs. And I observed that author/s didn’t mention anything regarding corporate investment policy. Why
4. What about Executive Pay polices impact on industrial polices.
5. you remove the China economic crises in 2015 and 2016 in which the GDP drops up to 6.9%. What about debt structure and investment impact.
6. Why the author/s didn’t mention about the two types of SOEs, one central controlled SOE’s and Local controlled SOE’s. The literature proved that central controlled SOE’s invest more as compare to Local control SOE’s. Why author/s didn’t mention regarding that. Author/s have to read articles on Central controlled SOEs and Local SOEs.
7. Explain with proper evidence regarding “Subsidy” because the govt only gave subsidy which is particularly to encourage Green Activities which is no-profitable and other subsides are profitable. So, there is a difference, explain more regarding subsidy. The theme of author/s is based on financial activities so explain how you relate theme of subsidy with this study.
So, justify my questions first.
Author Response
Thank you for giving us the opportunity to revise our paper “Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China” (Manuscript ID: sustainability-2103918).
We have substantially revised the paper in line with each comment and suggestion made by the reviewers, and below, we provide a list of itemized responses.
Executive Summary
We have made the following main revisions. In the Introduction, we have cited more literatures related corporate investment and industrial policies. For the Empirical analyses, we have taken the reviewers’ advice to update our sample from 2000 to 2020, covering the implement periods of 10th (2001-2005), 11th (2006-2010), 12th (2011-2015) and 13th (2015-2020) Five-Year Plans for National Economic and Social Development. Thus, the results and findings of our study become more convincing. Moreover, we have refined the definitions our key variables to make it easier to read. Additionally, we have supplemented the Appendix by including Nomenclature and the analysis of other policies’ effect on corporate investment and investment efficiency.
Author Response File: 
Author Response.pdf
Reviewer 2 Report
The article has a clear and well described structure. The research procedure - its course, the variables taken into account, the scope of data - are very well described, but there is a certain deficiency in this area.
Shortcomings of the article:
- insufficient overview of the world literature on factors influencing investment
- There is a need to indicate the conditions of application of the method used in the article, so that it can be clearly concluded whether the results are correct. It is necessary to describe the method itself - what exactly is this method. Has anyone used this method before in similar studies on the same topic? Were statistical tests carried out for the heteroescedasticity of the random component and the normality of the distribution of residuals? What are the disadvantages of this method, won't the selection of some additional potential independent variable lead to completely different results? Therefore, there is also a need to indicate arguments why the authors take into account such and not other variables?
Without answers to the above questions - I am not able to assess whether the conclusions of the research are correct.
Author Response
Thank you for giving us the opportunity to revise our paper “Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China” (Manuscript ID: sustainability-2103918).
We have substantially revised the paper in line with each comment and suggestion made by the reviewers, and below, we provide a list of itemized responses.
Executive Summary
We have made the following main revisions. In the Introduction, we have cited more literatures related corporate investment and industrial policies. For the Empirical analyses, we have taken the reviewers’ advice to update our sample from 2000 to 2020, covering the implement periods of 10th (2001-2005), 11th (2006-2010), 12th (2011-2015) and 13th (2015-2020) Five-Year Plans for National Economic and Social Development. Thus, the results and findings of our study become more convincing. Moreover, we have refined the definitions our key variables to make it easier to read. Additionally, we have supplemented the Appendix by including Nomenclature and the analysis of other policies’ effect on corporate investment and investment efficiency.
Author Response File: Author Response.pdf
Reviewer 3 Report
Title: Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China
According to what I've read, the study needs minor revisions before it can be accepted. Please see below my suggestions for revising the authors' manuscript:
1. Why the authors focused on the period of 2001-2015? More recent dataset is available. This might be a one limitation of the study.
2. The authors should cite some proper studies in 2nd 3rd 4th paragraphs in introduction section.
3. Due to using lots of abbreviations in the text, the author(s) should use a Table for abbreviations
4. In Table 2., the authors used one star even for 1% and 5% but at the bottom of the table they reported that *, ** and *** indicate statistical significance at the 10, 5 and 1 percent levels, respectively
5. To obtain low R square in the all estimated models is indicating omitted variable biased problem.
6. Finally the authors should provide more policy implications relevant to what is found in the current paper
Author Response
Thank you for giving us the opportunity to revise our paper “Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China” (Manuscript ID: sustainability-2103918).
We have substantially revised the paper in line with each comment and suggestion made by the reviewers, and below, we provide a list of itemized responses.
Executive Summary
We have made the following main revisions. In the Introduction, we have cited more literatures related corporate investment and industrial policies. For the Empirical analyses, we have taken the reviewers’ advice to update our sample from 2000 to 2020, covering the implement periods of 10th (2001-2005), 11th (2006-2010), 12th (2011-2015) and 13th (2015-2020) Five-Year Plans for National Economic and Social Development. Thus, the results and findings of our study become more convincing. Moreover, we have refined the definitions our key variables to make it easier to read. Additionally, we have supplemented the Appendix by including Nomenclature and the analysis of other policies’ effect on corporate investment and investment efficiency.
Author Response File: Author Response.pdf
Reviewer 4 Report
See the attachment.
Comments for author File: Comments.pdf
Author Response
Thank you for giving us the opportunity to revise our paper “Does Industrial Policy Reduce Corporate Investment Efficiency? Evidence from China” (Manuscript ID: sustainability-2103918).
We have substantially revised the paper in line with each comment and suggestion made by the reviewers, and below, we provide a list of itemized responses.
Executive Summary
We have made the following main revisions. In the Introduction, we have cited more literatures related corporate investment and industrial policies. For the Empirical analyses, we have taken the reviewers’ advice to update our sample from 2000 to 2020, covering the implement periods of 10th (2001-2005), 11th (2006-2010), 12th (2011-2015) and 13th (2015-2020) Five-Year Plans for National Economic and Social Development. Thus, the results and findings of our study become more convincing. Moreover, we have refined the definitions our key variables to make it easier to read. Additionally, we have supplemented the Appendix by including Nomenclature and the analysis of other policies’ effect on corporate investment and investment efficiency.
Author Response File: Author Response.pdf
Round 2
Reviewer 1 Report
Congratulation and appreciation to the author/s on giving a detailed revision with the explanation of each suggested point. No further comments because i feel author/s have revised the manuscript as directed and they include what the manuscript on this topic requires.
Thank You
Reviewer 2 Report
The article has been corrected and improved as suggested by the reviewer. I make no further comments. The article in its current form may be published in the Journal.
