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Prefecture government fiscal intervention and corporate asset allocation: The perspective of transaction cost theory

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  • Jieyang Pan

Abstract

This study examines the impact of prefecture-level government fiscal intervention on corporate asset allocation in China from the perspective of transaction cost theory. Using a panel dataset of Chinese listed firms from 2008 to 2023, we find that increased fiscal intervention significantly reduces firms’ allocation to operating assets while increasing financial asset holdings, indicating a substitution effect. Mechanism analysis suggests that fiscal intervention raises regional transaction costs, discouraging long-term productive investment. Heterogeneity analysis shows stronger effects among private firms and firms more dependent on local economies. These findings provide new evidence on how government intervention shapes firm-level resource allocation and offer policy implications for improving fiscal efficiency and supporting real-sector development in emerging economies.

Suggested Citation

  • Jieyang Pan, 2026. "Prefecture government fiscal intervention and corporate asset allocation: The perspective of transaction cost theory," PLOS ONE, Public Library of Science, vol. 21(7), pages 1-20, July.
    • Handle: RePEc:plo:pone00:0345478
    DOI: 10.1371/journal.pone.0345478
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    References listed on IDEAS

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    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474, December.
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