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Can strengthened financial regulation reduce monopsony power in superstar firms? Evidence from China's asset management reform

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  • Yao, Shiqi
  • Song, Limin
  • Zhang, Junkang

Abstract

This study examines whether strengthened financial regulation can improve resource allocation efficiency and mitigate the labor market monopsony power of superstar firms. Utilizing China's New Asset Management Regulation (NAMR) as a quasi-natural experiment and panel data from Chinese listed firms (2007–2022), we employ a triple difference model to assess the impact of this heightened financial oversight. The results indicate that the regulation significantly curtails the monopsony power of superstar firms, an effect particularly pronounced for those characterized by high labor intensity, substantial R&D investment, and intense market competition. Mechanism analysis reveals that the policy operates by increasing labor input, boosting R&D spending, and improving the human capital structure, which collectively diminish firms' dominance in the labor market. These findings highlight the potential of financial regulation to enhance equity in income distribution.

Suggested Citation

  • Yao, Shiqi & Song, Limin & Zhang, Junkang, 2026. "Can strengthened financial regulation reduce monopsony power in superstar firms? Evidence from China's asset management reform," Pacific-Basin Finance Journal, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:pacfin:v:96:y:2026:i:c:s0927538x26000028
    DOI: 10.1016/j.pacfin.2026.103056
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