Corporate Investment Research Articles

Impact of Stock Market Integration on Industrial Corporate Investment in Nigeria: An Empirical Study (1986-2023)

Nigeria, a sub-Saharan African nation, is endowed with an abundance of natural resources, particularly those needed for industrial purposes. Despite this, the present level of output in the industrial sector in Nigeria is too low, particularly when it comes to investment undertaking by corporate investors. Therefore, the study examined the effect of stock market integration on industrial corporate investment in Nigeria from 1986-2023. Data used were sourced from the Central bank of Nigeria Statistical Bulletin. The study used Augmented Dickey-Fuller (ADF), bound test and Autoregressive Distributed Lag. The ADF estimate indicated that money supply and all share index were integrated of order one; while, corporate investment, stock market integration, real exchange rate, and lending interest rate were integrated of order zero. The F-value for the bound test estimate was much higher than upper bound of critical value at 5% conventional level; therefore, suggesting a long-run link between the use variables. The short-run estimates showed that stock market integration, real exchange rate and all share index were significant with direct effect on corporate investment; while, money supply and lending interest rate were significant also with indirect effects. Furthermore, long-run estimate showed that money supply and all share index were significant with direct effect on corporate investment; while, real exchange rate and lending interest rate were significant with indirect effects. This suggests that stock market integration currently witnessing in Nigeria is tentative. The study concluded that the current growth witnessing by industrial corporate investment in Nigeria due to stock market integration is not sustainable. Therefore, recommended that the Nigerian Exchange Group’s management should ensure that stock market price exhibit low volatility rate by making sure that its stocks management policies reflect best global stock exchange practice.

The impact of FinTech adoption on corporate investment: Evidence from China

This research uses panel statistics of Chinese listed companies between 2010 and 2020 to examine when and how financial technology (FinTech) improves the investment efficiency of firms. We determine that the degree of FinTech is positively related to firm investment efficiency. This correlation tends to occur in areas with low levels of commercialization and urban growth, which is indicative of the broad characteristics of FinTech. Simultaneously, the positive effect of FinTech further strengthens the investment efficiency of enterprises through corporate governance and financing paths.

Green mechanism: Opportunities for corporate investment in PV/battery/diesel hybrid systems with techno-economic and environmental analysis

In rural areas, diesel generators are prevalent due to their lower initial cost, despite inefficiencies and carbon emissions. Transitioning to PV/Battery/Diesel systems offers a solution by reducing costs and emissions. However, the high upfront expenses present a significant barrier, particularly for rural communities, necessitating external financial support. This study evaluates the benefits of adopting a PV/Battery/Diesel hybrid system over traditional diesel generators in a rural community with 25 customers and a daily demand of 50 kWh. The proposed system includes a 12 kWp photovoltaic array and a 48 kWh battery bank, simulated using Hybrid Optimization of Multiple Energy Resources (HOMER) software. Results indicate a 91% renewable fraction and a cost of energy of 0.279 USD/kWh, substantially lower than the 1.05 USD/kWh of diesel-only systems, with CO2 savings of 25 t per year. The paper advocates for a case study approach to green mechanism, urging energy and environmental companies to invest in these systems. By replacing diesel generators with hybrid PV/Diesel/Battery systems, companies can offer electricity at a reduced cost, driving adoption. Selling carbon credits from emission savings can generate additional income, leveraging CO2 tax incentives. Under scenarios where investors cover 50% of diesel costs, selling electricity yields 9581 USD annually, and selling CO2 credits generates 500 USD annually. This leads to a payback period of 9.83 years without CO2 credits and 9.18 years with CO2 credits, totaling 46,848 USD without CO2 credits and 52,927 USD with CO2 credits over the project's lifespan. Meanwhile, adjusting electricity pricing to 75% of diesel costs, this increases annual income from electricity sales to 14,372 USD. This reduces the payback period to 5.89 years without CO2 credits and 5.66 years with CO2 credits, totaling 105,094 USD without CO2 credits and 111,174 USD with CO2 credits at the end of the project.

The impact of accounting conservatism on enterprise innovation investment

This study investigates the influence of accounting conservatism on corporate innovation investment through the lens of information asymmetry theory. While existing literature acknowledges the importance of accounting conservatism in corporate decision-making, there remains a gap in understanding how it specifically affects innovation investment, particularly in varied market environments and regulatory contexts. Specifically, current research often overlooks the heterogeneity of the impact of accounting conservatism on innovation investment under different market environments and regulatory frameworks. Additionally, there is a lack of specialized studies on the unique group of Chinese listed companies. This study fills this gap by empirically analyzing data from Chinese A-share listed companies, revealing a negative correlation between accounting conservatism and corporate innovation investment. Through empirical analysis of the financial reports and research and development (R&D) investment data of Chinese A-share listed companies from 2015 to 2022, this study finds a significant negative correlation between accounting conservatism and corporate innovation investment. Specifically, as accounting conservatism increases, corporate investment in R&D shows a decreasing trend, with a correlation coefficient of −0.364. This result is further validated by hierarchical regression analysis, where the regression coefficient is −0.465, indicating that accounting conservatism has a significant inhibitory effect on corporate innovation investment. This study is pioneering in its examination of the relationship between accounting conservatism and corporate innovation investment within the unique market environment of China, taking into account its distinctive characteristics and rapidly evolving technological industry background. To quantify accounting conservatism, the research employs the C-Score and G-Score models, while employing a range of indicators to measure corporate innovation investment, including proportions of R&D expenditure, number of new products or services, patent applications, total R&D personnel, capital investments, and progress in innovation projects. This comprehensive evaluation method enhances the accuracy and reliability of the study. The contribution of this study is significant as it offers a fresh perspective on how accounting conservatism influences corporate innovation investment. By providing empirical data support, it assists investors and corporate managers in making informed financial decisions and shaping innovation strategies. Through hierarchical regression analysis, the study substantiates the detrimental impact of accounting conservatism on corporate innovation investment, thereby establishing new theoretical and practical foundations for further research and application in related fields.

Remote hand: Cross-regional SASAC holdings and corporate investment efficiency: Evidence from China

The simultaneous existence of government intervention and support for state-owned enterprises makes it difficult to study the relationship between government involvement and business efficiency. Drawing on China's emerging and widely developed cross-regional state-owned holding patterns, this study examines the impact of reduced political intervention on the investment efficiency of local state-owned enterprises (SOEs) when resource support is constant. We demonstrate that the geographic separation of SASAC and SOEs contributes to corporate investment efficiency and that this effect works mainly through the reduction of political pressure and the optimisation of corporate governance. This confirms the existence of the government's grabbing effect on businesses from an opposite perspective.

Artificial Intelligence and Corporate Investment Decisions

Artificial Intelligence and Corporate Investment Decisions

THE MONETARY POLICY AND ITS IMPACT ON CONSUMPTION AND TRADE IN ROMANIA

The methods that a country's central bank uses to control the total amount of money in circulation and affect trade, consumption, and economic growth are collectively referred to as monetary policy. A monetary expansionary policy entails a reduction in interest rates. As borrowing costs decrease, customers are encouraged to borrow more money and spend more, which boosts consumer spending and promotes economic growth. On the other hand, when interest rates rise during contractionary monetary policy, saving becomes more appealing while borrowing becomes more expensive. As a result, consumers may cut down on spending, which has an impact on aggregate consumption. Businesses are encouraged to invest by lower interest rates brought on by expansionary policies. They may borrow money more cheaply, which boosts imports, company expansion, and capital expenditures. Trade can increase if expansionary measures cause the home currency to weaken and become more appealing to export. In contrast, exports can be hampered by a rising currency. In conclusion, trade dynamics, corporate investment, and consumption patterns should be all greatly impacted by monetary policy measures. In order to find out some evidence about the monetary policy and its impact on consumption and trade in Romania, the paper uses statistical information from the National Bank of Romania between 2003 and 2023 for the monetary policy interest rate. This is going to be assessed base on its impact upon: Final consumption expenditure of general government; Final consumption expenditure of households; Gross capital formation; Exports of goods and services; Imports of goods and services; all of this taken from Eurostat. The results should point out if an increase or decrease of monetary policy interest rate is going to produce an impact upon consumption and trade, or the contrary is going to take place.

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.

Virtual human on social media: Text mining and sentiment analysis

Virtual humans are embodied agents with a human-like appearance. Despite the recent booming development that has sparked widespread academic interest, how people perceive these seemingly human but entirely fictional creations remains unclear. To explore the status, trends, emotional tendencies, and focus of attention of the Chinese public towards virtual humans, this paper utilizes text mining techniques to collect and analyze popular posts related to virtual humans on Chinese social media. The results indicate that public discussions primarily focus on the technological and industrial development of virtual humans, applications in the fields of virtual idols and virtual streamers, and the corporate investment and policy development of virtual humans. Despite positive emotions dominating, there is an increasing trend in negative emotions. Concerns are related to service failures, the uncanny valley effect, ethical crises, and technological unemployment. The research findings contribute to policymakers, industry stakeholders, and the public in understanding the general attitudes toward virtual human technology, enabling informed decision-making.

The impact of China's carbon emissions trading policy on corporate investment expenditures: Evidence from carbon-intensive industries

The carbon emissions trading (CET) policy internalises the cost of carbon emission reductions borne by companies, which will affect the companies' investment and management decisions. From a micro perspective, this paper analyzes the impact on company investment expenditure and its transmission mechanism by implementing the CET policy. Based on panel data of China's A-share listed companies from eight carbon-intensive industries spanning 2010 to 2020, the time-varying difference-in-difference model and its extended model are used to evaluate the impact of the policy in the pilot areas. The results show that: first, based on the cost effect and legality theories, CET policy can reduce the investment expenditure of the companies by 71.95%. Second, CET policy reduces corporate investment expenditures by increasing corporate debt financing costs. When debt financing costs increase by 120.25%, the investment expenditures will reduce by 2.56% indirectly while the intermediary effect of equity financing costs is not significant. Finally, with the implementation of CET policy, the inhibitory effect on corporate investment expenditures has gradually increased. CET policy has a more significant inhibitory effect on investment expenditures of nonstate-owned companies and small-scale companies. The results have passed the robustness test and provide evidence for the policy-maker to balance microeconomic entity development and carbon reduction, and for companies to make optimization investment and financing decisions in response to policy shocks effectively.

Political uncertainty and institutional herding

Political uncertainty represents a key determinant of corporate investment decisions. In this paper, we study the relation between political uncertainty and investment from the perspective of institutional investors. Using U.S. equity holdings data from 13F filings, we find that institutional investors herd during politically uncertain times. This trading behavior is stronger when U.S. presidents are unpopular, due to their proclivity for controversial policies, and among riskier stocks. We also find that this mechanism, despite generating some excess trading, helps incorporate a risk premium into stock prices. Overall, the findings unveil a new channel through which political uncertainty affects financial markets.

Digital transformation and the herd behavior of corporate investment

Digital technology is a widespread integration of the benefits of digital transformation into all aspects of modern company operations. This paper examines how digital transformation affects firms’ investment herd behavior. Based on listed firms from 2012 to 2022, this paper adopts a two-fixed model to explore the effects and underlying mechanisms. The findings indicate that digital transformation can effectively inhibit corporate investment herd behavior, and the impact is achieved by enhancing internal information disclosure and external information intermediation. The findings offer empirical proof of how to effectively regulate the herd behavior observed in financial markets in the digital era.

Are the media drivers of R&D?

Research exploring how extra-legal institutional aspects might impact corporate investment policy in innovation is still in its early stages. This lack of research is even greater when it comes to studying the role of media attention in corporate innovation. This study extends prior literature by investigating the relationship between media visibility and research and development (R&D) investment in a continental European context. Using a sample of Spanish listed firms in the 2008–2022 period, results indicate that media attention has a positive effect on corporate innovation. The results provide support for arguments that the media reduce agency conflicts, facilitate fundraising, and increase the reputational risk of internal agents as well as the pressure to meet stakeholder demands and the chances of obtaining external help to develop new ideas and projects. Moreover, we show that media attention encourages innovation in companies who are more isolated from stakeholder demands, who face greater agency conflicts, or who suffer from financial difficulties.

Employee ownership and corporate investment efficiency in Europe

Employee ownership and corporate investment efficiency in Europe

National culture and corporate investment: does uncertainty matter?

PurposeOur purpose is to explore how culture’s impact on investment is depending on uncertainty levels.Design/methodology/approachThis study investigates the interplay between national culture, uncertainty, and corporate investment decisions. Focusing on the uncertainty avoidance dimension (HUA) from Hofstede’s culture framework and utilizing the World Uncertainty Index (WUI) as a measure of uncertainty, this research explores how culture’s impact on investment is depending on uncertainty levels.FindingsOur results reveal that high HUA countries lower long-term investment during periods of heightened uncertainty, particularly in riskier investments like R&D, rather than capital expenditure. This relation is more pronounced for smaller firms. The findings suggest that HUA is associated with less risk taking, primarily when uncertainty is high. Furthermore, we demonstrate that the interaction between HUA and uncertainty exerts more significant and consistent effects on corporate investment than other cultural dimensions, religion, and various formal institutions, contrary to prevailing literature.Originality/valueThis study looks at the relationship between national culture and corporate investment under ambiguity, and what are the implications for risk taking. If national culture is related to riskier investments, such as R&D, relative to safer investments, like capital expenditure this would imply that risk taking is explaining the relationship between national culture and corporate investment. This relation should be clear during uncertain times. This is the first study to include the moderating effects of the level of uncertainty on the relation between national culture and corporate investment (or financial decisions in general).

Air pollution and corporate financial assets allocation: Evidence from China

Understanding the relationship between air pollution and corporate investment strategy has significant implications for both environmental sustainability and economic development. Utilizing data from China's A-share listed companies spanning from 2014 through 2022, we investigate the causal relationship between air pollution and corporate allocation of financial assets. Using an instrumental variable approach, we find that worse air quality has a positive effect on corporate financial asset allocation. Specifically, a 1% increase in the number of air pollution days tends to result in a 0.002% increase in the share of financial assets held by firms. This effect prevails through diverse robustness tests. Furthermore, as companies encounter more stringent financing constraints and environmental regulations, the trend of air pollution promoting the increased financialization of assets becomes more pronounced. Based on the findings, this paper suggests providing more support for enterprises to facilitate the upgrading of production and operation to meet environmental standards.

How Does Financial Technology Innovation Impact Business Performance?

ABSTRACT Financial technology (FinTech) is transforming traditional financial services and has a significant impact on business performance. This study investigates how FinTech affects the performance of businesses in China. It constructs a FinTech Index based on data from the Baidu Search Index and aligns this index with the financial data of publicly listed Chinese companies over the period from 2011 to 2021. We find that the development of FinTech positively affects corporate performance improvement through external and internal environment mechanisms. The findings reveal that FinTech significantly contributes to business performance by enhancing information transparency, alleviating financing constraints, and improving the efficiency of corporate investment environments. Additionally, we find that the impact of FinTech development on corporate performance exhibits heterogeneity. The beneficial effects of FinTech on corporate performance are particularly noticeable in in eastern regions, groups with lower levels of centralization, and areas with weaker regulatory oversight. The empirical results can be used to help emerging market firms improve their performance and assist investors in identifying worthwhile investment prospects.

Science and Technology Finance Policy and Corporate Investment Efficiency -- A Quasi-Natural Experiment Based on Pilot Policies for Integrating Technology with Financer

Science and Technology Finance Policy and Corporate Investment Efficiency -- A Quasi-Natural Experiment Based on Pilot Policies for Integrating Technology with Financer

The moderating effect of audit quality on the relationship between financial inclusion and corporate investment: new evidence from the Middle East and North Africa region

The moderating effect of audit quality on the relationship between financial inclusion and corporate investment: new evidence from the Middle East and North Africa region

Inwestycje a ograniczenia finansowe przedsiębiorstw: przypadek spółek notowanych na giełdach w Unii Europejskiej

The purpose of this study is to identify the factors that influence the investment decisions of companies. Particular focus is put on the direction of the relationships studied, taking into account the division between companies that may face financial constraints and those that have no problem with access to capital. The examined entities are non-financial companies listed on stock exchanges in 26 European Union countries between 2011 and 2019. Panel data models were used to empirically identify factors influencing investment decisions. The results indicate that factors such as cash flow size, debt, share of fixed assets in total assets, growth opportunities, operational risk, or country economic growth have a positive impact on corporate investment, while company size has a negative impact. However, when the entire research sample is divided into financially constrained and unconstrained companies, the direction of the relationship reverses in financially constrained companies for cash flow and debt. The study contributes to the literature with strong evidence of a change in the relationship between cash flow and investment volume depending on the financial situation of companies in European countries. Similar studies have been conducted on a countrywide basis. The presented study covers a large block of countries that are of particular importance to the global economy.