Unified tax incentive policies, tax burden fairness, and corporate investment efficiency

We investigate the impact and mechanism of industrial policy on corporate investment and investment efficiency. Using the micro-level data of A-share listed firms on China’s stock market from 2001–2020, we examine whether industrial policies have different effects on China’s state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). Moreover, we identify specific policy followers to further illustrate the impact of industrial policy on investment efficiency. The empirical results show that industrial policies promote investments among non-SOEs at the cost of reducing their investment efficiency, but have no effect on the investment and efficiency of SOEs. Government subsidy and inter-industry competition are the main mechanisms for the negative impact of industrial policy on investment efficiency. Moreover, target industrial policies reduce the investment efficiency of both SOE and non-SOE policy followers. Therefore, to achieve the goal of improving corporate investment efficiency and promoting sustainable economic development, policy-makers should pay more attention to the consequence of unnecessary government subsidy and excessive inter-industry competition.

In the context of China's economic transformation and rapid technological advancement, based on the implementation of the "Pilot Policy for Promoting the Integration of Technology and Finance", this paper constructs a panel data of prefecture-level cities in China from 2005 to 2017, and examines the impact and mechanism of science and technology financel policy on the corporate Investment efficiency by using the DID method. The DID method is used to investigate the impact and mechanism of technology financel policy on the corporate Investment efficiency. It is found that the science and technology financel policy significantly improves the corporate Investment efficiency, and this conclusion remains valid after a series of robustness tests such as the parallel trend test, the placebo test, and the Propensity Score Matching-Difference in Differences (PSM-DID) analyses. Further mechanism analysis in this paper reveals that the science and technology finance policy mainly enhances the corporate Investment efficiency by alleviating the corporate financing constraints, promoting the digital transformation of enterprises, and increasing the capitalized R&D investment of enterprises. In addition, the effect of the implementation of science and technology finance policy has a certain degree of heterogeneity, and this policy has a more significant impact on the improvement of investment efficiency of non-state-owned enterprises and large enterprises. This paper delves into the impact of technology finance on the investment behavior of micro-enterprises, providing theoretical support and empirical guidance for the advancement of science and technology finance practices and high-quality economic development.

This study aims to determine the effect of the effectiveness of the board of commissioners, audit committee, and institutional ownership on the efficiency of corporate investment . In addition to that, it aims to determine the moderation effect of institutional ownership toward the relationship between the effectiveness of the board of commissioners and audit committee with the efficiency of the company's investment. The effectiveness of the board of commissioners and audit committee is measured based on the independency, activity, size, and competence. By using logistic regression with 282 samples from Indonesia Stock Exchange in 2014, the results of this study provide empirical evidence that the effectiveness of the board of commissioners and institutional ownership has no effect on the efficiency of corporate investment, while the effectiveness of audit committees ha s a positive influence in the efficiency of corporate investment. Furthermore, institutional ownership can not strengthen the relationship between the effectiveness of the board's effectiveness and the effectiveness of the audit committee with the efficiency of the corporate investment. This study contributes to the literature, in which the previous literature has not linked investment efficiency with specific governance mechanisms that relats to effectiveness of the board of commissioners and audit committees. Furthermore , this study contributes to the examination of moderating role of institutional ownership. This study implies that with regard to investment decisions, the audit committee has a significant role in assisting the board of commissioners in carrying out its monitoring functions.

The purpose of this paper is to examine the relationship between regional financial development and corporate investment efficiency as well as the relationship between firm-level characteristics and corporate investment efficiency. Using a large sample of A-listed companies in China from CSMAR database between 2003 and 2016, this paper explores corporate investment efficiency and its influencing factors in emerging market on the basis of heterogeneous stochastic frontier model. The results show that: (1) the average investment efficiency of Chinese listed companies is 74.5%, and the investment efficiency of large enterprises, state-owned enterprises and enterprises with relatively high financial development level is significantly higher; (2) compared with average corporate investment efficiency in the year 2003, the investment efficiency of different types of enterprises in 2016 is significantly higher, and the gap is gradually widening; (3) enterprise heterogeneity namely firm size, nature of property right, and institutional environment reflected by the level of regional financial development indirectly affects corporate investment efficiency by influencing the financing constraints and uncertainty. The findings suggest that to improve corporate investment efficiency in emerging market, financial market should be accelerated, regional balance should be restored and the differences among regions, industries and differences between public and private sectors should be eliminated.

PurposeThis study examines the impact of the national innovation system (NIS) on corporate investment efficiency in Vietnam, an emerging socialist country where innovation is central to the national development plan.Design/methodology/approachThe study employs a sample of Vietnamese listed firms on the Ho Chi Minh Stock Exchange and Hanoi Stock Exchange from 2012 to 2022. The research models are estimated by fixed-effect estimators, while two-stage least-squares with instrumental variables and entropy balancing methods are used to address the endogeneity issues in the research design.FindingsWe find that firms’ investment efficiency increases with the advancement of the NIS, and this impact is attributed to the input measures of national innovation. This finding is robust to different model specifications and endogeneity tests. Additional analysis shows that the private sector improves investment efficiency to a greater extent than state-owned firms.Research limitations/implicationsThe findings from this research imply a successful approach to corporate development executed by the government and encourage the continuation of the current plan with strategic modifications to further promote Vietnamese firms’ corporate investment efficiency and nurture the growth of the private sector, the engine of the Vietnam economy.Originality/valueThis is the first study to examine the impact of the NIS on corporate investment efficiency, particularly in Vietnam. Secondly, this study delves into a unique structure of the Vietnamese economy through the state ownership lens and points out the heterogeneous impact of NIS on investment efficiency between firms in the private and public sectors.

Employee education level and efficiency of corporate investment

Classification shifting and efficiency of corporate investment

본 연구에서는 이익지속성이 기업의 투자효율성에 미치는 영향에 대해 연구한다. 또한 기업의 투자성향에 따라 과잉투자 및 과소투자 그룹으로 구분하여 이익지속성이 과잉투자 및 과소투자 문제를 완화하는지에 대해 검증한다. 선행연구에서는 이익지속성이 높을수록 당기의 이익으로 미래성과 및 미래현금흐름을 유용하게 예측할 수 있으며, 이는 이익의 질이 높다는 것을 의미한다(Dichev et al. 2013). 이러한 미래성과를 반영하는 신뢰성 있는 회계정보를 통해 경영자는 보다 나은 프로젝트를 선별하고 투자결정에 유용하게 사용할 수 있으므로 투자효율성이 개선 될 것이라고 예상한다. 이에 따라 이익지속성은 기업의 투자효율성과 양(+)의 관계가 있을 것이라는 가설을 검증한다. 이익지속성은 Sloan(1996)의 모형으로 측정하고, 투자효율성은 Biddle et al. (2009)의 모형으로 측정한다. 2011년부터 2016년까지 유가증권 및 코스닥 시장에 상장된 7,332개 기업을 대상으로 연구한 결과, 이익지속성이 높을수록 기업의 투자효율성이 향상되는 것으로 나타났다. 과잉투자 기업과 과소투자 기업을 구분하여 분석한 결과, 이익지속성이 과소투자 기업의 투자를 촉진하여 과소투자 문제를 완화하지만, 과잉투자 기업에는 큰 영향을 미치지 않는 것으로 나타났다. 분석의 강건성을 확인하기 위해 투자효율성 측정치를 달리한 분석에서도 일관된 결과를 도출하였다. 본 연구는 선행연구가 재무보고 품질을 측정하는데 주로 발생액의 질로 측정한 것과는 달리 이익지속성을 이익의 질의 대용치로 사용하여 투자효율성과의 관련성을 검증하였다는 점에서 의의가 있다.This study analyzes the effects of earnings persistence on corporate investment efficiency. According to prior research, the higher earnings persistence is, the more profitable future earnings and future cash flows can be predicted, which means that earnings quality is higher(Dichev et al. 2013). Such reliable accounting information can be used by managers to select better projects and improve investment decision making. Therefore, this study examines the hypothesis that earnings persistence will be positively related to investment efficiency. Earnings persistence is measured by Sloan(1996) and investment efficiency by Biddle et al.(2009). The sample consists of firms listed on the Korea Stock Exchange over the period of 2011 to 2016. The main results of this study are as follow. The results show that earnings persistence is positively related with investment efficiency, implying that firms with higher earnings persistence show higher investment efficiency. According to Biddle et al.(2009), the research sample is divided into over-investment group and under-investment group. As a result, earnings persistence promotes investment of under-investment group to mitigate under-investment problems, but it does not have a significant effect on over-investment group. In conclusion, earnings persistence increases the investment efficiency. It also increases the investment efficiency of under-investment firms more than over-investment firms. These results are consistent with the analysis of using other investment efficiency measures to confirm the robustness of the analysis. This study contributes to a growing body of literature by providing empirical evidence of earnings persistence role in improving investment efficiency.

PurposeThis paper aims to examine whether CEOs with an engineering background increase corporate investment efficiency (CIE). The authors further investigate the role of engineering directors on boards of the above association.Design/methodology/approachDrawing from upper-echelon theory, which suggests that corporate outcomes are a reflection of its top management characteristics, the authors hypothesise a positive association between engineer CEOs and CIE and a positive moderation role of the proportion of engineer directors on boards in the above association. The authors examine this link using a sample of Australian Securities Exchange 200 firms from 2015 to 2022. Engineer CEO data is hand-collected from corporate annual report biographies and investment efficiency is a measure that captures whether the investments are maintained at optimal levels relative to industry-year benchmarks, following the approaches of Biddle et al. (2009), Chen et al. (2011) and the average values of both models.FindingsThe results indicate support for the hypotheses, revealing that firms managed by engineer CEOs have higher investment efficiency than their counterpart firms. This association is exacerbated in the presence of a higher proportion of engineer directors on boards. The results are robust to year and industry-fixed effects, propensity score matching, alternative measures of investment efficiency and robust standard errors. Our results also remain valid for an industry sub-sample using certain industries in which engineering expertise maybe more desirable (e.g. metals and mining).Research limitations/implicationsBy showing that engineer CEOs are significantly associated with CIE, the authors contribute to upper-echelon literature examining the link between CEO characteristics and corporate outcomes, particularly, investment decision efficiency. The influence of engineering background on corporate outcomes is less examined in the literature; thus, the authors contribute to this thin literature.Originality/valueThe findings are informative to potential investors in evaluating firms’ investment efficiency before investing in firms. For example, firms with engineer CEOs are likely to maintain efficient investment levels in future years.

Seasoned equity offerings (SEO) are an important approach for listed companies to obtain funds after an initial public offering (IPO), which plays a major role in enterprises’ demand for funds. However, due to agency conflicts, information asymmetry, tunneling by major shareholders, and other behaviors, listed companies sometimes fail to make proper use of the refinancing funds. In this study, the impact of SEO on corporate investment efficiency is tested. Furthermore, the impact of board member characteristics on investment efficiency of refinancing companies is tested. Refinancing listed companies in Shenzhen and Shanghai Exchange Stock from 2009 to 2020 form the research samples. The research shows that SEO reduces the corporate investment efficiency. According to the impact analysis of the board member characteristics on the investment efficiency of refinancing companies, age heterogeneity of the board inhibits investment efficiency. The older the mean age of directors, the higher the investment efficiency. Furthermore, sex heterogeneity also inhibits investment efficiency. The more female directors, the lower the investment efficiency. Moreover, overseas backgrounds and experiences of directors also inhibit investment efficiency. These findings not only extend the research on the consequences of SEO in China, but also provide reference points and guidance for listed companies to adopt a scientific and reasonable refinancing method, give full play to the advantages, and overcome disadvantages of board members.

This paper investigates the relationship between institutional blockholdings and corporate investment efficiency. Using a sample of 283 French-listed firms during 2002‒2016, we find that institutional blockholders improve investment efficiency and decrease the magnitude of over-investment. This finding withstands a battery of sensitivity checks and remains unchanged after accounting for endogeneity concerns. Moreover, we provide evidence that investment inefficiency decrease in the presence of institutional investors with longer-term investment horizons due to improved monitoring and information quality. Third, we find that both foreign and domestic institutional blockholders play a significant role in shaping firms' efficient investment behavior. Finally, cross-sectional tests indicate that institutional monitoring mitigates investment distortions to a greater extent for firms facing higher agency problems and greater information asymmetry.

Previous literature has explored investment efficiency in terms of executive incentives, supervisory mechanisms, information disclosure, agency conflicts, and managerial capabilities. This study focuses on analysing the power influence of executives in the context of Chinese State-Owned Enterprises (SOEs) from the two hypotheses of “economic man” and “social man”, aiming to improve the research between the power influence of executives and investment efficiency. This study adopts principal component analysis to comprehensively evaluate the power influence of executives in Chinese SOEs from four dimensions, namely, organisational position influence, personal competence influence, industry influence, and prestige influence. Using the analytical tool STATA15 to establish a regression model, the mechanism of executive power influence on investment efficiency is explored from the logic of “financing constraints” and “diversification”. It then explores the moderating effects of equity concentration and independent director oversight. The empirical results show that the greater the power influence of the executive, the lower the investment efficiency. The intermediary mechanisms of this study find that executives of Chinese SOEs can use their power influence to reduce financing constraints, obtain more resources, and make diversified investments, thus generating inefficient investments. This study also finds that equity concentration and oversight by independent directors have a positive moderating effect on executive power and investment efficiency. The results of this study are robust due to the use of the instrumental variables approach. The innovation of this study integrates the measurement of executive power influence in the particular context of SOEs and analyzes its impact on investment efficiency. It enriches the study of factors influencing executive power and corporate investment efficiency.

PurposeThis paper investigates the effect of foreign ownership on corporate investment efficiency in an emerging market.Design/methodology/approachThis paper employs the investment-investment opportunities sensitivity to proxy for investment efficiency. Corporate investment and investment opportunities are measured by capital expenditure and Tobin's Q respectively. Control variables include state ownership, firm profitability, cash flow, financial leverage, firm size, bank debt, asset tangibility and financial distress. The research sample includes 5,502 firm-years from 621 firms listed in Vietnamese stock market from 2007 to 2017.FindingsWe find that foreign ownership negatively affects corporate investment efficiency. Furthermore, we continue to examine the effects of foreign ownership with financially unconstrained and constrained firms that are classified based on the annual medians of Kaplan and Zingales (1997) score, firm size and dividend payout ratio. We find that the negative relationship between foreign ownership and investment efficiency is stronger in financially unconstrained.Originality/valuePrior research shows that foreign ownership is positively related to corporate investment efficiency. However, in Vietnamese stock market, foreign investors may prefer safe business activities as a response to uncertainty in the business environment, ineffective legislations on corporate governance and their informational disadvantage. Therefore, in this paper, we argue that foreign ownership negatively affects Vietnamese firms' investment efficiency. Risk-adverse foreign investors make firms lose some profitable investment opportunities and thus decrease their investment efficiency.

With the development of economic globalization and the increasing competitiveness of Chinese enterprises, more and more Chinese enterprises have gone abroad and achieved rapid growth through overseas MA （2） from the perspective of ownership, the investment efficiency of SOEs and non-SOEs has been negatively affected in the short term. In the long run, the investment efficiency of SOEs is still negatively affected by overseas MA （3） from the perspective of the host country, the overseas M&As of the target countries in developed countries （regions） have reduced corporate investment efficiency. The overseas M&As of the target countries in non-developed countries （regions） have no impact on the corporate investment efficiency. The conclusions reached in the article have obvious policy implications. At present, some enterprises do have the phenomenon of inefficient investment by overseas M&As. This question urgently requires regulators to analyze and judge, and formulate practical measures to identify and treat overseas M&As behaviors. Under the conditions of controlling overall risks, regulators should encourage enterprises to make reasonable foreign investment and support overseas M&As with the purpose of promoting domestic industrial structural upgrade and technological progress. In a word, the contribution of this article is reflected in three aspects. First, from the perspective of the uncertainty of overseas M&As, the paper analyzes the analysis framework of overseas M&As affecting corporate investment efficiency, and enriches the economic effects of overseas M&As. Second, by matching the Zephyr global M&A database and CSMAR database, and using the propensity-score matching approach and the difference-in-differences estimation method, this article not only tests the negative effect of overseas M&As on investment efficiency, but also explores the difference of the effect of ownership and the host country. Third, at the conclusion, although overseas M&As have a negative impact on investment efficiency in general, the negative impact on SOEs is significantly stronger than that on non-SOEs, which provides a theory for the adjustment of high-quality development strategies and current overseas M&As policies.

PurposeThis paper aims to explore whether environmental, social and governance (ESG) performance is positively associated with firm investment efficiency (IE) in emerging economies. It also examines whether board cultural diversity can moderate the ESG–IE relationship.Design/methodology/approachThis paper uses a cross-country sample of listed firms located in seven emerging countries over the 2011–2019 period. The authors use a fixed effect panel regression to empirically test the hypotheses. The authors also use a lagged model and a Heckman’s (1979) two-stage procedure to mitigate potential endogeneity issues. In addition, a two-stage least squares regression analysis was done as an additional robustness check.FindingsThis study finds that firms with stronger ESG performance have a higher investment efficiency. Interestingly, this study finds that board cultural diversity negatively moderates the impact of ESG performance on IE for firms operating in settings prone to overinvestment. This result suggests that ESG performance plays a less important role in mitigating managers' tendencies to overinvest when corporate boards have more foreign directors. However, the authors do not find such evidence in firms prone to underinvestment. These findings hold after using an alternative measure of IE and controlling for endogeneity concerns.Originality/valueThis paper adds to the existing body of knowledge in three dimensions. First, to the best of the authors’ knowledge, this is the first cross-country study that investigates the linkage between ESG performance and corporate IE in the context of emerging countries. Second, the authors have enriched the prior literature by examining the moderating effect of board cultural diversity on the positive association between ESG performance and corporate IE. Finally, this study has important implications for policymakers and capital suppliers in emerging countries, which strive to facilitate the efficient allocation of scarce resources.