Abstract
This paper conducts an empirical analysis based on the unbalanced panel data of China’s A-share non-financial listed companies in 2011-2016, and uses Richarson’s residual error measurement model to study the influence of the integration of industrial and financial on investment efficiency. To explore the mechanism of the integration of industrial and financial on investment efficiency, this paper further uses a cash-cash flow sensitivity model to study the influence of the integration of industrial and financial on financing constraints. Results show that the integration of industrial and financial can improve the investment efficiency of listed companies. The integration of industrial and financial can mitigate underinvestment by mitigating financing constraints.
Highlights
Modiglinai and Miller [1] assumed that in a perfect market without the influence of transaction costs, income tax and other factors, the company’s internal financing and external financing can be mutually replaced, and in this perfect market, the company’s financing behavior will not affect the investment behavior
The purpose of this paper is to explore the impact of holding equity in non-listed financial institutions to listed companies’ investment efficiency and financing constraints, so as to reveal the mechanism by which the integration of industrial and financial affects corporate value
The contributions of this article are as follows: Theoretically, this paper examines the effect of shareholding in financial institutions on under/over investment and financing constraints by the industrial companies from a brand-new and practical significance perspective, which enriches the theoretical knowledge of corporate investment efficiency
Summary
Modiglinai and Miller [1] assumed that in a perfect market without the influence of transaction costs, income tax and other factors, the company’s internal financing and external financing can be mutually replaced, and in this perfect market, the company’s financing behavior will not affect the investment behavior. The purpose of this paper is to explore the impact of holding equity in non-listed financial institutions to listed companies’ investment efficiency and financing constraints, so as to reveal the mechanism by which the integration of industrial and financial affects corporate value. The contributions of this article are as follows: Theoretically, this paper examines the effect of shareholding in financial institutions on under/over investment and financing constraints by the industrial companies from a brand-new and practical significance perspective, which enriches the theoretical knowledge of corporate investment efficiency. The results of this study indicate that shareholding in financial institutions reduces financial constraints for companies and reduce underinvestment and improves investment efficiency of the companies, which has certain reference significance for industrial enterprises about how to make better use of the combination of industrial and financial to improve the allocation efficiency of funds.
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