Does the Rights Hypothesis Apply to China?
利用世界银行调查的企业数据，研究中国法律发展对企业投资、技术采用、创新和交易复杂性的影响，发现活跃的法院系统与这些决策正相关，但存在对国企和本地企业的偏向。
Using firm-level data from a World Bank survey, this paper examines how legal development in China relates to various firm decisions. I find that a more active court system is associated with more investment, more adoption of technology, more innovation, and more complex transactions. Specifically, when a higher percentage of business disputes are resolved through the court system, firms tend to have higher investment rates, higher propensities to adopt new automated technology, and higher probabilities of developing new products. In addition, they tend to have more nonlocal sales. These findings are consistent with a sophisticated version of the rights hypothesis, in which the rule of law eventually replaces relation-based governance as a superior governance mechanism. I find two limitations of China’s legal system. The court system does a better job facilitating the growth of state-owned enterprises than of private firms, and it protects local firms better than nonlocal firms.