The guiding effect of economic stimulus plan on corporate investment behavior in heterogeneous institutional environment

This paper studies the impact of China’s “Four Trillion” Economic Stimulus Plan (hereinafter referred to as the Plan) on the investment behavior of enterprises under different external and internal institutional environments. By dividing the impacts of the Plan into direct and indirect ones, we found that the indirectly-affected enterprises expand investment in fixed assets in areas with a low degree of marketization, while the directly-affected enterprises increase investment in intangible assets in areas with a high degree of marketization. However, the guiding effect of the Plan on corporate investment only exists in enterprises with low financial flexibility. These results indicate that the Plan stimulates enterprises to expand investment in different directions by different impact mechanisms, and the degree of regional marketization and the financial flexibility of enterprises determine whether the enterprises select to expand their investment under the Plan.