Table 7 Institutional environment: weak...

Table 7

Institutional environment: weak institutions vs strong institutions

	Full sample	By institutional environment
		Weak institutions	Strong institutions
	(1)	(2)	(3)
$Δ l n S A L E_{t}$	0.992*** (70.173)	0.960*** (69.004)	1.009*** (71.171)
$Δ l n S A L E_{t} \times D_{t}$	−0.106*** (−4.288)	0.013 (0.337)	−0.198*** (−6.040)
$Δ l n S A L E_{t} \times T U R N O V E R_{t}$	−0.013** (−2.146)	0.002 (0.232)	−0.015** (−2.523)
$Δ lnSAL E_{t} \times D_{t} \times TURNOVE R_{t}$	−0.023** (−2.068)	−0.032** (−2.115)	−0.014** (−2.016)
$Δ l n S A L E_{t} \times L M K T I D X_{t}$	−0.012** (−1.982)
$Δ lnSAL E_{t} \times D_{t} \times LMKTID X_{t}$	−0.021* (−1.661)
$Δ l n S A L E_{t} \times T U R N O V E R_{t} \times L M K T I D X_{t}$	0.014 (1.511)
$Δ lnSAL E_{t} \times D_{t} \times TURNOVE R_{t} \times LMKTID X_{t}$	−0.013** (−2.161)
Control	Yes	Yes	Yes
Year fixed effect	Yes	Yes	Yes
Firm fixed effect	Yes	Yes	Yes
Observations	20,392	9,098	11,294
Adjusted $R^{2}$	0.678	0.671	0.683

	Full sample	By institutional environment
		Weak institutions	Strong institutions
	(1)	(2)	(3)
$Δ l n S A L E_{t}$	0.992*** (70.173)	0.960*** (69.004)	1.009*** (71.171)
$Δ l n S A L E_{t} \times D_{t}$	−0.106*** (−4.288)	0.013 (0.337)	−0.198*** (−6.040)
$Δ l n S A L E_{t} \times T U R N O V E R_{t}$	−0.013** (−2.146)	0.002 (0.232)	−0.015** (−2.523)
$Δ lnSAL E_{t} \times D_{t} \times TURNOVE R_{t}$	−0.023** (−2.068)	−0.032** (−2.115)	−0.014** (−2.016)
$Δ l n S A L E_{t} \times L M K T I D X_{t}$	−0.012** (−1.982)
$Δ lnSAL E_{t} \times D_{t} \times LMKTID X_{t}$	−0.021* (−1.661)
$Δ l n S A L E_{t} \times T U R N O V E R_{t} \times L M K T I D X_{t}$	0.014 (1.511)
$Δ lnSAL E_{t} \times D_{t} \times TURNOVE R_{t} \times LMKTID X_{t}$	−0.013** (−2.161)
Control	Yes	Yes	Yes
Year fixed effect	Yes	Yes	Yes
Firm fixed effect	Yes	Yes	Yes
Observations	20,392	9,098	11,294
Adjusted $R^{2}$	0.678	0.671	0.683

Note(s): This table presents the results of testing the impact of the institutional environment on the relation between political uncertainty and asymmetric behavior of operating costs. The subscript $t$ denotes the time index, while prefecture-city and firm indices are omitted for brevity. The dependent variable is $Δ l n X O P R,$ the log-change in operating costs. Column (1) adds the key variable $L M K T I D X$ ⁠. $L M K T I D X$ is a dummy variable that takes the value of one if a firm is located in a region with a below-median Marketization index and zero otherwise. A low index value indicates a weak institutional environment. Columns (2) and (3) report the results on the subsamples of weak institutional environment and strong institutional environment. $Δ l n S A L E$ is the log-change in sales. $D$ is a dummy variable that takes the value of one if sales decrease, and zero otherwise. $T U R N O V E R$ is a dummy variable that takes the value of one if either the city head or mayor is changed in year $t$ ⁠, and zero otherwise. All variables are defined in the Table A1. Regressions control for both firm and year fixed effects. Robust t-statistics reported in parentheses are based on standard errors clustered by firm. In this table, *, **, and *** denote statistical significance at the 10, 5, and 1% levels, respectively

[ViewLarge]

Sharing Unavailable