Regional Judicial Quality and Deepening Vertical Specialization:Evidence from the Establishment of Circuit Court
The deepening of division of labor plays a profound role in facilitating the circu-lation of the domestic economy,making it an urgent contemporary issue that requires ex-ploration.Corporate vertical specialization is a crucial manifestation of division of labor at the micro-level.Using the data of A-share listed enterprises,the staggered establishment of Circuit Courts by the Supreme People's Court and staggered DID model we examine the impact of judicial quality on corporate vertical specialization.We find the establishment of Circuit Court significantly promotes corporate vertical specialization.Mechanism analyses indicate that Circuit Court facilitates vertical specialization through improving contract envi-ronment,alleviating local protectionism,and reducing administrative intervention.Het-erogeneity analysis reveals that the impact of Circuit Courts on vertical specialized among corporates is more pronounced when corporates face higher market transaction costs,lack political connections,and are geographically closer to the Circuit Courts.The results sug-gest that improvement of regional judicial level can promote the deepening of corporate ver-tical specialization,expanding the research on the microeconomic consequences of the legal environment and factors affecting corporate boundaries.Additionally,it sheds light on the practical implementation of the role of Circuit Courts in elevating regional judicial qual-ity from a micro-enterprise perspective.The conclusions of this article provide valuable pol-icy implications for further advancing judicial system reform and refining the Circuit Court system.
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