Does the administrative approval reform impact firm's investment decisions?

By leveraging the quasi-natural experiment of the "Without the Need for a Second Trip" reform in Zhejiang province, China, in 2016, this paper examines the impact of government examination and approval reform on corporate investment decisions. We find that the firm's investment level has increased by about 2 times after the government examination and approval reform than that before the reform. The result remains after a series of robustness tests. Our evidence suggests that increased government efficiency has significantly increased the sensitivity of firm investment and investment opportunities. Further analysis shows that the government examination and approval reform has created a favorable business environment for firm investment, which reduces the information cost of firm investment and enhances the flexibility of corporate investment decision making.