Plausibly Exogenous [771] - Cost of Capital (02/28/2022)
LHS Variable
Investment
RHS Variable
Cost of capital
Source of Exogenous Variation
Since 2004, the Chinese government, through State-Owned Assets Supervision and Administration Commissions (SASACs), has been using formula-based schemes to evaluate state-owned enterprises (SOEs). These schemes are based on four accounting measures. One of them was return on equity (ROE) initially, and later was replaced by economic value added (EVA) starting 2010.
- He, Liao, and Wang (2022), “What Gets Measured Gets Managed: Investment and the Cost of Capital”