Abstract
This study examines the impact of social trust, the state ownership and their joint effects on investment efficiency in China using 6885 firm-year observations from 2010 to 2018. We find that higher social trust is associated with higher investment efficiency, and the state ownership leads to lower investment efficiency. The SOEs exhibit higher under and over-investment problems relative to non-SOEs. The lower investment efficiency of SOEs is further amplified in provinces with higher social trust. These findings are consistent with agency and information asymmetry explanations, and robust to endogeneity and alternative measurement of variables.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
More From: Journal of International Financial Markets, Institutions and Money
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.