Stimulating private entrepreneurship has been a purportedly vital item on the Chinese government?s recent policy agenda, though perhaps few have given it credence. Arguably the most significant legislative implementation of this policy was the 2013 amendment of the Company Law, which reformed long-standing ?registered capital? rules. Professor Wei Cui will discuss a research project (conducted with Mengying Wei) that uses confidential taxpayer data to identify the reform?s impact on firm formation, firm financing choices, and overall firm performance. Preliminary findings include that the reform enabled new firms to start with 40% lower assets but generate similar levels of revenues and profits as firms registered before the reform, indicating an improvement in investment efficiency. New firms optimized their financing structure by borrowing more and smoothing equity contributions over time. The reform also substantially increased firm registration, and there is suggestive evidence that it allowed productive but wealth-constrained firms to enter.
