Abstract
This study explores the influence of gambling culture on investment efficiency. Using local lottery sales to measure gambling culture, we find that gambling culture is significantly negatively associated with investment efficiency. The effect is mainly manifested as the over-investment caused by the gambling culture. The paper also implies that state ownership, highly educated management teams, equity incentives, and higher corporate transparency can help mitigate the effect of gambling culture. Moreover, agency cost and risk-taking level play the role of intermediary effect. Our findings are still robust when addressing the endogeneity issue with various methods.
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