Affects Investment Efficiency Research Articles

The Financial Report Quality, Debt Maturity, and Foreign Ownership on Investment Efficiency Relationship

This research aims to investigate the effect of financial report quality, debt maturity, and foreign ownership on investment efficiency. This research uses a quantitative method with the population of basic materials sector companies listed on the Indonesia Stock Exchange. The data analysis technique used in this research is multiple linear regression analysis. The results of this study indicate that simultaneously, the quality of financial statements, debt maturity, and foreign ownership do not affect investment efficiency. Partially, debt maturity affects investment efficiency. The quality of financial statements and foreign ownership does not affect investment efficiency. This study provides the main implication, namely the importance of improving the quality of corporate financial management so that investors know essential factors to evaluate investment potential. The financial statement quality ensures accurate information as a basis for making the right investment decisions. Debt to maturity affects liquidity risk and financial stability, and foreign ownership brings better governance practices and access to capital and technology, all of which contribute to improving investment efficiency.

Direct and indirect effects of unconditional conservatism on investment efficiency

PurposeThis study aims to investigate the effects of unconditional conservatism on investment efficiency, focusing on both its direct and indirect effects.Design/methodology/approachWe conduct multiple regression analyses on a sample of nonfinancial companies listed on the New York Stock Exchange from 2010 to 2018.FindingsWe provide evidence that conditional conservatism plays a central role in mediating the indirect effects of unconditional conservatism on investment efficiency. This is because a decrease in conditional conservatism, following an increase in unconditional conservatism, leads to reduced investment efficiency.Research limitations/implicationsThis study offers valuable insights for the growing body of literature on the relationship between accounting conservatism and investment efficiency while emphasizing the critical role of conditional conservatism in mediating the relationship between unconditional conservatism and investment efficiency.Practical implicationsThis study has several implications. Practitioners can make informed decisions regarding accounting policies, predict the potential effects of these choices and mitigate the negative impact of unconditional conservatism on investment efficiency. Investors can make more informed decisions by understanding how unconditional and conditional conservatism affect investment efficiency. Standard setters can guide user behavior toward more efficient investment decisions.Originality/valueConsidering the lack of comprehensive understanding in prior literature regarding the underlying mechanisms through which unconditional conservatism influences investment efficiency, this study investigates the direct and indirect effects characterizing this relationship. We provide evidence supporting a new explanation for the relationship between unconditional conservatism and investment efficiency.

Political connections and investment efficiency of renewable energy enterprises: The role of marketization

Using data from 77 listed renewable energy enterprises in China and the threshold effect model, this study investigates the impact of political connections on the investment efficiencies of renewable energy enterprises at different degrees of marketization. A Richardson residual measurement model is applied to measure this efficiency. Further, this study constructs a cash flow sensitivity model to analyze how the political connections affect investment efficiency through financing factors and then analyzes the four external financing channels using a path analysis. The results show that when the degree of marketization is less than 9.280, political connections can improve investment efficiency. When the degree of marketization exceeds 9.280, the influence of political connections on investment efficiency is statistically insignificant. At a low marketization stage, political connections enhance the ability of enterprises to acquire resources through four kinds of external financing channels: bank credit, corporate bonds, commercial credit, and equity financing. This supports investment efficiency by reducing cash flow sensitivity. Due to the differences in the nature of the enterprises and personnel appointments, non-state-owned renewable energy enterprises with political connections experience more significant differences with respect to the impact on investment efficiency under different marketization levels.

Supply chain network, digital transformation, and investment efficiency

ABSTRACT In the modern digital era, firms’ position in the supply chain networks significantly impacts their investment decision-making. As businesses undergo digital transformation to enhance collaboration and supply chain efficiency, a research gap exists in understanding their combined influence on investment efficiency. Using Chinese public firms from 2008 to 2021 as a sample, we construct a supply chain network and analyse how supply chain network structures affect investment efficiency. Our results show that both supply chain network centrality and structural holes enhance firms’ investment efficiency. Mechanism analysis shows that corporate digital transformation moderates this relationship by mitigating financing constraints and agency costs. In addition, further results reveal that the effect of supply chain networks is stronger for non-state-owned firms, firms in low-marketization region, and firms in closer geographic proximity to their customer base. This study contributes to understanding the roles of supply chain networks and digital transformation in firms’ investment efficiency.

Does Failure Tolerance of the Board of Directors Affect Investment Efficiency?

Based on the perspective of failure tolerance, this paper measures the boards failure tolerance by whether the companys performance failing to meet the boards expectations leads to the mandatory replacement of managers. On this basis, the paper selects data from A-share listed companies in China from 2010 to 2022 to study the impact of board failure tolerance on corporate investment efficiency. The research finds that board failure tolerance can significantly improve corporate investment efficiency, both inhibiting over-investment and alleviating under-investment.

Does Failure Tolerance of the Board of Directors Affect Investment Efficiency?

Does Failure Tolerance of the Board of Directors Affect Investment Efficiency?

Environmental and social disclosure, managerial entrenchment, and investment efficiency

This study investigates the effect of environmental and social (E&S) disclosure and managerial entrenchment on investment efficiency. E&S disclosure increases not only capital accessibility but also external monitoring of entrenched managers’ actions. We develop a theoretical model that demonstrates how these benefits and costs of firms’ voluntary E&S disclosure affect investment efficiency. Using a large sample of U.S.-listed firms over the period 2016–2022, we test the model’s predictions and provide empirical evidence suggesting that E&S disclosure is positively associated with investment efficiency and that this effect is stronger for firms with lower managerial entrenchment or those disclosing more financially material E&S information. Our study contributes to the investment efficiency literature by demonstrating the relevance of an incentive-compatible mechanism reflecting managers’ choice of E&S voluntary disclosure to the efficient capital allocation.

Information asymmetry and investment efficiency: the role of blockholders

PurposeThis study aims to examine the extent to which information asymmetry affects investment efficiency and whether the presence of blockholders moderate this relationship.Design/methodology/approachWe employ the data of firms listed on the Malaysian stock exchange for the period 2010–2018, to compose our sample. Our final sample includes the 100 largest non-financial firms based on market capitalization. Collectively, these 100 companies contribute 84.2% to the total market capitalization (MYR 1,730bn) which is representative of the whole market. The ordinary least squares regressions were used as the main estimation technique. The system generalized method of moments, two-stage least squares and propensity score matching were also used, to address potential endogeneity concerns.FindingsWe document a positively significant association of information asymmetry with investment inefficiency. These results imply that information asymmetry reduces investment efficiency and enhances sub-optimal investments. We also document that blockholders negatively moderate the relationship of information asymmetry with investment inefficiency. Further analyses show that investment inefficiency is higher in low-growth firms than in high-growth firms because of higher information asymmetry.Research limitations/implicationsWe focus on Malaysia, which is a predominantly common-law Anglo-Saxon country. Graff (2008) documented that the investors are treated differently across legal systems and there are differences between the continental European and Anglo-Saxon countries. La Porta et al. (1999) documented that investors tend to have more legal protection in Anglo-Saxon countries. Therefore, our results may not be generalized to countries with different legal systems.Practical implicationsAn important implication of our findings is that stakeholders may encourage the presence of blockholders and give them a voice to weaken the positive relationship between information asymmetry and investment inefficiency.Originality/valueThis study contributes to the contingency literature by investigating the moderating effect of an important governance mechanism, i.e. the presence of blockholders on information asymmetry-investment efficiency nexus. Despite being important, this moderating effect has been largely overlooked in the literature. Our study contributes by providing an understanding of how blockholders can influence investment decisions, offering insights for academics, investors and policymakers focused on improving the efficacy of investment decisions and governance structure.

How mixed ownership affects investment efficiency? evidence from state-owned enterprises in China.

The inefficiency observed in investment within state-owned enterprises presents a significant practical challenge that can affect the sustainable development of China's economy. To address this issue, this study comprehensively explores the intricate mechanisms underlying the governance implications of mixed ownership on the investment efficiency of listed companies. Drawing on unbalanced panel data encompassing Shanghai and Shenzhen Stock Exchange A-share listed companies in China spanning the period from 2008 to 2022, this study employs a fixed-effects model to unveil the nuanced ways in which mixed ownership influences investment efficiency through the lens of agency costs. This study transcends the boundaries of traditional agency conflicts between managers and shareholders. It delves deeper, illuminating the diverse effects of agency conflicts between significant controlling shareholders and minority shareholders. The results revealed a noteworthy positive correlation between mixed ownership and investment efficiency, and verified the intermediary role of agency costs between mixed ownership and investment efficiency, which is an important result of our research. Heterogeneity analysis indicates that the relationship between the two can be affected by external events, such as during the COVID-19 pandemic, investment efficiency is not the most concerned issue for enterprises. The findings have practical implications for practitioners and policymakers, as they offer avenues for optimizing investment strategies and fostering efficient and effective corporate governance practices.

Exploring the Nexus: Bibliometric Analysis of Tax Avoidance and Investment Efficiency

A deep understanding of tax avoidance practices can offer a theoretical basis for mitigating the negative impact of investment inefficiency on firms. However, current research on tax avoidance and investment decisions often focuses on specific studies and lacks a comprehensive perspective. In this study, we analyzed 16 years (2008-2023) of publications on tax avoidance and investment efficiency from the Scopus database using bibliometric methods. Our findings indicate a significant increase in the number of published articles over recent decades. The United States, China, and the United Kingdom have been the most prolific contributors to this field. Additionally, several leading journals dominate the field, and there has been substantial collaboration among authors, providing diverse insights and perspectives. Our analysis reveals that tax avoidance affects investment efficiency through various factors, including the quality of accounting information, managers ability, corporate governance, and public policies. By examining keywords, we have identified current research trends and offer recommendations for future research directions.

Does corporate governance affect investment efficiency of Indian firms? Panel evidence from new governance indices

AbstractThis study examines the effects of corporate governance (CG) on investment inefficiency for 506 Indian listed firms. Using new stipulations of CG and globally recognized governance practices, an overall corporate governance index (CGI) and five sub‐indices such as board index (BINDEX), audit index (AINDEX), ownership index (OINDEX), nomination and remuneration index (NRINDEX), and disclosure index (DINDEX) were constructed. Employing newly developed governance indices along with firm‐specific control variables, several pooled regression models were estimated. Robustness checks were conducted using two‐step system GMM and an alternate measure of managerial investment efficiency. The pooled estimated coefficient of CGI and sub‐indices (except OINDEX) on investment inefficiency, overinvestment and underinvest is found to be negative and significant suggesting that effective/robust governance at firm level reduces investment inefficiencies (improves investment efficiency) through effective supervision and monitoring thereby reducing the opportunistic behavior of managers.

Faktor-Faktor Yang Mempengaruhi Efisiensi Investasi Pada Perusahaan Sektor Transportasi Periode 2018-2022

ABSTRACT Investment efficiency is thought to have several factors that influence it in this study the author uses four factors, namely the quality of financial statements (KLK), debt maturity, profitability performance, and company size. This research is a synthesis research that aims to analyze the impact of KLK, debt maturity, profitability performance, and company size on investment efficiency. Samples selected by purposive sampling were taken from companies in the transportation sector verified on the IDX during the period 2018 to 2022, with a total of 80 sample data. Data analysis was carried out using the PLS-SEM (Partial Least Squares-Structural Equation Modeling) method using WarpPLS 7.0 software. The results showed that KLK and Debt Maturity have no impact on investment efficiency, while Profitability Performance and Company Size affect investment efficiency.

The Influence of Financial Report Quality, CEO Career Concern, and CEO Gender on Investment Efficiency with Good Governance as a Moderating Variable

This study aims to examine the effect of Financial Report Quality, CEO Article Career Concern, and CEO Gender on Investment Efficiency with Good Governance as a Moderating variable. This research method uses Moderated Regression Analysis (MRA) with Eviews statistical tools. This study uses a sample of 680 observations of non-financial companies in Indonesia during 2022 using panel regression. The results showed that the quality of financial statements has no effect on investment efficiency. The quality of financial statements that has no effect is possible because the overinvestment scenario also has no effect. In this condition, the quality of financial statements has not been able to mitigate the occurrence of overinvestment due to the high agency level. Meanwhile, in underinvestment conditions, the quality of financial reporting has a significant positive effect, which means that the quality of financial reporting can reduce underinvestment because the quality of financial reporting can be used to attract external funds so that the company avoids underinvestment conditions. The career concern variable of the president director has no effect on investment efficiency, this is possible because in underinvestment conditions it also has no effect because most sample companies do not experience funding constraints so that the career concern of the president director does not mitigate underinvestment. Meanwhile, in overinvestment conditions, it has a positive effect. Thus, the concern of the CEO can reduce the occurrence of overinvestment. Good governance variables affect investment efficiency.

Innovation-driven policy and firm investment

This study examines whether and how innovation-driven policy affects investment efficiency. Taking the approval of national innovation-driven pilot city as an exogenous shock, we conduct a staggered Difference-in-Difference (DID) approach to investigate the causal effects of the innovation-driven orientation on investment efficiency in the context of China. We find that the innovation-driven policy improves firms’ investment efficiency. Further, we distinguish under-investment and over-investment companies and find that after the approval of national innovation-driven pilot city, firms are more active in reducing redundant investments than their counterparts. The maintenance investment expenditure of firms is crowded out, while the investment in innovative R&D increases significantly. Heterogeneity analysis shows that the effect on investment efficiency is particularly pronounced in private firms and low financial constrained firms.

The Influence of Financial Report Quality, CEO Career Concern, and CEO Gender on Investment Efficiency with Good Governance as a Moderating Variable

This study aims to examine the effect of Financial Report Quality, CEO Career Concern, and CEO Gender on Investment Efficiency with Good Governance as a Moderating variable. This research method uses Moderated Regression Analysis (MRA) with Eviews statistical tools. This study uses a sample of 680 observations of non-financial companies in Indonesia during 2022 using panel regression. The results showed that the quality of financial statements has no effect on investment efficiency. The quality of financial statements that has no effect is possible because the overinvestment scenario also has no effect. In this condition, the quality of financial statements has not been able to mitigate the occurrence of overinvestment due to the high agency level. Meanwhile, in underinvestment conditions, the quality of financial reporting has a significant positive effect, which means that the quality of financial reporting can reduce underinvestment because the quality of financial reporting can be used to attract external funds so that the company avoids underinvestment conditions. The career concern variable of the president director has no effect on investment efficiency, this is possible because in underinvestment conditions it also has no effect because most sample companies do not experience funding constraints so that the career concern of the president director does not mitigate underinvestment. Meanwhile, in overinvestment conditions, it has a positive effect. Thus, the concern of the CEO can reduce the occurrence of overinvestment. Good governance variables affect investment efficiency.

Does CSR affect investment efficiency? The moderating role of company reputation

Does CSR affect investment efficiency? The moderating role of company reputation

경영자 과신성향과 ESG등급이 투자효율성에 미치는 영향

I would like to examine how management and overconfidence caused by ESG activities, which are issues among recent management techniques, affect investment decisions made by managers with strong overconfidence tendencies. This study analyzed whether CEO overconfidence affects investment efficiency according to ESG ratings. Overconfidence was measured based on the research of Schrand and Zechman(2012) and Ahmed and Duellman(2013), and investment efficiency was measured based on the research of Biddle et al.(2009). The study period is from 2013 to 2022, and the total number of samples is 6,298, and the results are as follows.
 First, overconfidence has a positive effect on investment efficiency, which means that the stronger the overconfidence tendency, the more inefficient it appears in investment efficiency.
 Second, ESG ratings have a negative effect on investment efficiency, which means that the higher the ESG rating, the more efficient the company's investment appears.
 Third, it was confirmed that overconfidence is alleviating investment inefficiency caused by overinvestment due to the high ESG rating. Companies with high ESG ratings have found that investment inefficiencies are mitigated even though managers have a strong tendency to over-line.
 This study is expected to contribute to prior research by analyzing the impact of overconfidence propensity on investment efficiency according to ESG ratings and providing evidence that it may vary depending on detailed grades.

Killing Growth: Homicides and Corporate Investment in Brazil

We examine the effects of violent crime on corporate investment and financing decisions of Brazilian firms. Exploring city variation in homicides, we find that an increase in the growth rate of homicides is associated with significantly lower corporate investments, with lower labour investments, and with a higher likelihood of layoffs. Spikes in violent crime are also associated with more conservative financing policies, reflected in higher cash holdings, in lower R&D (research and development) expenditures, and in lower dividend payments. Homicides further affect investment efficiency and financing choices, decoupling investment from debt finance and profitability. Moreover, the negative association between homicides and investment is significantly stronger in smaller firms, which highlights the uneven costs of violent crime in reducing firm growth.

Financial flexibility and investment efficiency: The moderating role of board financial expertise

The environment for enterprise external financing has deteriorated recently, especially in the wake of the COVID-19 outbreak, which has severely restricted enterprise external financing options. Therefore, it is essential to implement efficient financial methods to encourage business growth. This paper intends to investigate the moderating effect of board financial expertise on the relationship between flexibility and investment efficiency of listed companies in Egypt. This study includes moderator and control variables to produce an empirical model and findings that are more reliable based on 592 sample observations collected as annual secondary data from 2014 to 2021. Generalized least squares, logistic regression, and panel-corrected standard error were employed in the analysis. Results indicate that a higher board financial expert’s ratio decreases investment efficiency and has a moderating effect on financial flexibility and investment efficiency. High proportions of flexibility affect investment efficiency. Robustness checks confirm the negative effect of board financial expertise on the relationship between flexibility and investment efficiency. In unpredictable times, financial flexibility can help firms meet capital needs and boost the effectiveness of their investment decisions. Therefore, to increase investment efficiency and support firm growth, firms should maintain their financial flexibility while tightening internal controls.

Pengaruh Konservatisme Akuntansi Dan Debt Maturity Terhadap Efisiensi Investasi Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia Tahun 2019-2021

This study aims to determine the effect of the effect of accounting conservatism and debt maturity on investment efficiency in manufacturing companies listed on the Indonesia Stock Exchange in 2019-2021. The population in this study are manufacturing companies listed on the Indonesia Stock Exchange in 2019-2021. The research sample used was 20 companies, where the method in sampling this study used purposive sampling method sampling with predetermined criteria. The analysis method used is Multiple Linear Regression Analysis. This test was carried out using the SPSS 16.0 for windows program. Simultaneous test results show that accounting conservatism and debt maturity affect investment efficiency. Partial test results show that accounting conservatism has a negative effect on investment efficiency. While debt maturity has a positive effect on investment efficiency.