We find a positive relation between product market competition and corporate investment using a sample of Chinese manufacturing firms during 1999–2010. A quasi-natural experiment and change regressions yield consistent evidence. We postulate that China's high and predictable growth rate, as it transitions from a developing economy to a developed economy, is what drives the positive relation between competition and investment. We directly test and provide support for this growth-oriented explanation. We also find that high investment under high competition is a value-enhancing proposition for firms. Finally, we test whether some firm types are more likely to invest under high competition in a growing economy, and we find that firms with high predation risk and firms that are industry leaders invest more.

Family involvement as chair of the board combines the reputation of the controlling family and the firm. Thus, the family's incentive to prevent reputation loss acts as a corporate governance mechanism in mitigating self-serving and bad news hoarding behavior of family firms. We find a lower future stock price crash risk in family firms with family related chairman, compared with family firms with non-family related chairman. The impact of family related chairman is more pronounced in firms with weaker external monitoring and more severe financial distress, and when families have greater reputation concern. Additionally, we find family-chair firms conduct more bad news forecasting, less tunneling behavior, higher earnings quality, as well as have lower costs of equity and overall better performance in the future. The family CEO has little impact on future stock price crash risk.