Compliance policy and the optimisation effect of state capital operations: evidence from the compliance management guidelines of central SOEs

This study examines the impact of the compliance policy on investment efficiency by using the quasi-natural experiment of the Compliance Management Guidelines of Central State-Owned Enterprises issued in November 2018. The results show that the compliance policy significantly improves the investment efficiency of central state-owned enterprises (SOEs). The impact is more pronounced in the samples with lower degree of digitalisation, weaker overseas experience of executives and more serious industry monopoly. The compliance policy can improve the investment efficiency of central SOEs by reducing agency cost, optimising internal organisational environment and reshaping the risk perception of management. Further, the compliance policy significantly improves both over-investment and under-investment in central SOEs. It also contributes to enhanced Economic Value Added (EVA). These findings provide empirical evidence for compliance policy effectiveness and policy reference for promoting compliance management across Chinese enterprises.