Abstract
The study mainly investigates the moderating effect of managerial power on the relationship between debts with different sources and overinvestment. In this paper, we divide debts with different sources into three categories, namely commercial credit, bank loan, and bond financing. Based on the data of the Chinese listed enterprises from 2009 to 2014, we find that commercial credit has significantly negative correlation with the overinvestment. While bond financing is negatively related to the overinvestment, the correlation between bank loan and the overinvestment is significantly positive. In addition, our results indicate that greater managerial power can seriously weaken the suppressing effect of the commercial credit and bond financing on the overinvestment.
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