Abstract: Using China’s firm-level dataset and matched difference-in-differences approach, this paper evaluates the impacts of special economic zones (SEZs) expansion program on firm financial performance. The results show that: first, the program leads to a loss of firm financial performance in the expansion areas, in which the return on sales (ROS), return on assets (ROA) and return on equity (ROE) all decreased significantly; second, the loss of firm financial performance is caused by the rising production costs and operation expenses; third, the program has the characteristics of eliminating excessive production capacity and raising minimum wage standard, which makes the firms of overcapacity industries and labor-intensive industry suffer more profit losses.

Keywords: place-based policy, financial performance, special economic zones, China

JEL codes: R11, D24, O12

DOI: ...