Expropriation Risk and Investment: A Natural Experiment


This paper uses the enactment of China’s 2007 Property Law (the Law), which reduces the risk of expropriation by local governments, as the setting to investigate the importance of property rights protection for private firm investment. Using propensity score matching and a difference-in-differences design, we find that firms facing weaker property rights protection prior to the Law significantly increase their investment after the Law. Cross-sectional analyses document further evidence indicating that a decrease in firms’ perceived expropriation risk is the mechanism underlying the Law’s effect. Overall, our results suggest that stronger property rights induce greater investment in private firms.

The paper is available here

It will be moderated by Prof Donald Low (HKUST).  

The webinar will be broadcast live on our YouTube channel


Allen Huang is an Associate Professor in the Department of Accounting, the Associate Dean of the School of Business, and Faculty Associate of the IEMS at HKUST. His research has been featured in CFA Digest, CFO, Harvard Business Review, Harvard Law School Forum, Vox and Financial Times, and has won First Paper in MIT Asia Conference in Accounting (twice), IRRC Institute Research Award, and International Centre for Pension Management Research Award. His publications have appeared in top-tier finance, accounting and management journals such as the Journal of Finance, Management Science, The Accounting Review, Journal of Accounting Research, Journal of Accounting and Economics, Review of Accounting Studies, and Contemporary Accounting Research. He is an editor at the Journal of Business, Finance and Accounting. More >>

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