Improve Investment Efficiency Research Articles

Research on the Mediate and Moderate Factors between Executive's Attitude and Investment Efficiency -- Taking the Software and IT Service Industry as an Example

Taking China's software and IT service industry from 2018 to 2021 as a sample, this study explores the mediator and moderator of enterprise strategic radicalization in the executive's positive attitude and investment efficiency. The findings show that when the chairman and general manager of a company are in one position, the strong positive impact of management on investment efficiency will have the opposite effect; Furthermore, the degree of enterprise strategic radicalization has a mediating effect between the positive attitude of management and inefficient investment, and this situation is particularly evident when the size of the company's board of directors is small. However, regardless of the size of the board of directors, it will play a positive regulatory role in the degree of strategic radicalization and investment efficiency. That is, when the degree of strategic radicalization is higher, the larger the board of directors will help improve investment efficiency. In addition, the degree of enterprise strategic radicalism has a mediating effect between management attitude and investment efficiency, but this situation is more pronounced when the proportion of male board members is low. Regardless of the proportion of male directors in a company, it will have a positive moderating effect on the degree of strategic radicalization and investment efficiency. Finally, the stronger the positive attitude and the higher the proportion of independent directors, the more likely it is for the enterprise to increase its strategic radicalization. However, this has no impact on investment efficiency.

Does fintech promote the sustainable development of renewable energy enterprises?

Based on the data of listed renewable energy enterprises in China from 2009 to 2020, I study the impact of fintech on the sustainable development of renewable energy enterprises. The results show that fintech promotes the sustainable development of renewable energy enterprises. The mechanism tests show that fintech promotes the sustainable development of renewable energy enterprises by improving investment efficiency. The cross-sectional results show that the implementation of green credit policies and the improvement of information disclosure quality promote the positive impact of fintech on the sustainable development of renewable energy enterprises. This study enriches the literature in the field of fintech and renewable energy enterprises and provides empirical evidence and policy enlightenment for fintech to promote sustainable development in renewable energy enterprises.

Financial Flexibility and Investment Efficiency

In recent years, the external financing environment of enterprises has deteriorated, especially since the impact of the COVID-19 epidemic, which has further limited external financing opportunities for enterprises. Therefore, it is imperative to adopt effective financial strategies to promote enterprise growth. This paper examines the influence mechanism of financial flexibility on the investment efficiency of new generation listed companies in the information technology industry from 2017 to 2020. Using the adjustment path analysis method, the paper constructs and verifies the role path of "financial flexibility → investment efficiency" to explore the impact of financial flexibility on investment efficiency and its effect on enterprise growth. The status quo of financial flexibility and investment efficiency of listed companies in the new generation of information technology industry is analyzed descriptively using stata16.0 statistical software. The paper proposes a hypothesis and constructs a multiple linear regression model to examine the influence of financial flexibility on investment efficiency. The empirical results show that the new generation of IT enterprises face challenges such as low capital flexibility and investment efficiency, particularly insufficient investment. Financial flexibility can help enterprises cope with capital demands under uncertain circumstances and improve the efficiency of enterprise investment. Therefore, in the market environment, enterprises should retain financial flexibility while strengthening internal control to improve investment efficiency and meet the needs of enterprise growth. The government and financial sector should promote supply-side structural reform in the financial sector, raise the level of regional financial development, and provide a favorable environment for external financing of strategic emerging industries such as the next-generation information technology industry.

The nature of corporate social responsibility disclosure and investment efficiency: Evidence from China

Corporate social responsibility (CSR) disclosure has gained more attention from both practitioners and scholars. Company executives are starting to seek competitive differentiation from their sustainability strategies (McKinsey & Company, 2020). This study explores the link between CSR disclosure and investment efficiency using a sample of Chinese-listed firms from 2010 to 2019. The findings suggest that CSR disclosure improves investment efficiency through reducing information asymmetry and agency cost. Also, mandatory CSR disclosure has a more significant effect on investment efficiency than voluntary CSR disclosure. In addition, this study finds that the nature of ownership (state-owned vs. non-state-owned), CSR performance, institutional ownership, and the level of industry competition all affect this relationship. The study provides meaningful implications for future CSR disclosure policy development.

Research on the Influence of Securities Research Newspapers on the Company's Stock Trend and Investment Strategies

Because stocks have the advantages of good liquidity and high returns, many investors will choose to invest in stocks to obtain certain income. But stocks have the disadvantage of high risk. Therefore, certain analysis and research are required when investing in stocks. Under the background of big data, research papers of securities companies can play a certain reference role for investors. The paper extracts the characteristic indexes of 10 stocks, establishes TOPSIS model and multiple linear regression model to analyze the influence of characteristic indexes on the stock trend, and proposes clear investment strategies. In the further analysis, this paper uses the gray relational analysis method to study the impact of the flash of emergencies, public opinion and natural disasters on 10 stocks, so as to propose new investment strategies. The purpose of this study is to provide investors with valuable investment strategies and improve investment efficiency.

Analysing SME investment, financing constraints and its determinants. A stochastic frontier approach

In this paper we explore the link between Small and Medium Enterprises (SMEs) investment and their economic characteristics, together the presence of financing constraints during the post-2008 crisis recovery period. We use novel survey data for Irish SMEs between 2016 and 2018, which disaggregates investment by asset type and allows a granular assessment typically not present in the existing literature. Our approach links investment to the marginal product of capital using a stochastic frontier model to explore and measure the presence of constraints. We also test whether liquid assets, indebtedness and investment dissatisfaction impact SMEs investment constraints. We find a clear link between investment and its marginal product with elasticities of between 0.55 and 0.65; indicating that a unit per cent increase in marginal product leads to 0.55–0.65 increases in investment. The investment efficiency estimates obtained show the presence of financing constraints. We find evidence of both internal and external finance sources explaining investment efficiency of small fixed assets. Higher collateral availability contributes to improve investment efficiency for all fixed assets.

Corporate diversification, investment efficiency and the business cycle

I document the time-varying investment efficiency of conglomerates compared with single-segment firms. I find that, during recessions, conglomerates have higher Q-sensitivity of investment than do stand-alone firms, in contrast to the relationship during expansion periods. I also find that conglomerates, with the benefits from internal capital markets, exhibit increased dependence of investment on internal capital during recessionary periods, while stand-alone firms significantly increase cash retention and deviate their investment from its optimal level more severely. I examine the effect of the degree of diversification and find consistent evidence on investment efficiency and deployment of internal capital. I also provide evidence that conglomerates with stronger governance do not improve investment efficiency during recession, which suggests that agency costs cannot fully explain the changes in investment of conglomerates.

Analysis of the Influence Mechanisms of Environmental Management System Certification on the Green Innovation of Enterprises: The Exogenous Shock Effect of Environmental Protection Tax

Promoting the green transformation of enterprises is key to achieving the goal of “double carbon” and promoting sustainable economic development. Based on 2012-2021 panel data of Chinese listed companies in Shanghai and Shenzhen, this study explores how various factors interacting with environmental management system certification (ISO14001 certification) indirectly impact enterprises’ green innovation. The mechanism analysis indicates that enterprises’ management system certification promotes green innovation by improving investment efficiency and alleviating financing constraints. Heterogeneity analysis demonstrates that this promotion effect of environmental management system certification on enterprise green innovation is primarily reflected in private and large-scale enterprises. Further analysis demonstrates that the implementation of the Environmental Protection Tax Law of the People’s Republic of China in 2018 strengthened the system even further. Compared with state-owned enterprises, this positive effect is primarily concentrated in non-state-owned enterprises. This study provides empirical evidence to confirm the beneficial impact of environmental management system certification and environmental protection tax on corporate green innovation and provides inspiration for the promotion of this practice.

Research on carbon emission factors of heavy chemical industry park based on generalized Divisia index method

Based on the energy consumption and economic data of a heavy chemical industrial park in northwest China from 2013 to 2020, the carbon emissions of the park were calculated. The generalized Divisia index method (GDIM) was employed to analyze the effects of eight absolute and ten relative indicators of carbon emission changes in the heavy chemical industrial park. The results show that optimizing the electricity structure, reducing the energy output and carbon output intensities, and improving investment efficiency have a significant effect on inhibiting carbon emission. The inhibitory effect from reducing investment carbon intensity, fossil energy, and the total energy consumption scale was clearly evident. The deterioration of fossil fuel energy structure, and the increase in investment, output, and total electricity consumption scales are the main factors affecting carbon emission growth. Carbon emissions from industrial processes have a limited impact on carbon emissions. Finally, pertinent suggestions are provided.

Does energy information disclosure really improve investment efficiency? A cross-exploration based on company life cycle and unexpected expenditure

Energy is important for environmental improvement and company development, and is displayed by information disclosure which plays a critical role in investment efficiency. This study re-explored the effect of energy information disclosure on investment efficiency in heavy pollution industry from the cross-perspective of company life cycle and expected expenditure. Specifically, this study divided companies into three groups: growth, maturity, decline stages, and in these groups, companies were sub-divided into two sub-groups: over-investment and under-investment. Collecting data from the listed companies in China, the results show that energy information disclosure significantly improves investment efficiency in growth and maturity stages when companies over-invest. However, this relationship is not obvious for over-invested companies in decline stage. Furthermore, when the investment is insufficient, the disclosure of energy information also has a positive effect on investment efficiency in growth and decline stages. While this relationship is inverted U-shaped in mature companies. This work provides suggestions for managing companies in heavy pollution to improve investment efficiency, and improve environmental improvement.

Mandatory dividend policy and investment efficiency within state-owned business groups

This research explores capital allocation efficiency in business groups when parent firms experience adverse shocks in their cash flow. Using the quasi-experimental method, this study finds that: (1) When parent central state-owned enterprises (parent CSOEs) are required to pay dividends to the government, their group-affiliated listed central state-owned enterprises (listed CSOEs) substantially improve investment efficiency. (2) A plausible mechanism is that the adverse cash shocks of parent CSOEs could facilitate the resource reallocation through related party transactions within a business group motivated by the listed CSOEs' investment opportunity instead of the parent CSOEs' tunneling behavior. (3) Our findings are more pronounced for firms with more serious agency problems. Overall, we provide the empirical evaluation of the economic consequences of mandatory dividend policy in terms of a firm's investment efficiency within a state-owned business group.

Can minority investor activism promote corporate risk-taking? Evidence from a quasi-natural experiment in China

In this study, we investigate the potential of minority investor activism to alleviate risk-related agency problems. We focus on the China Securities Investor Services Centre (CSISC), a not-for-profit minority investor promoted by the China Securities Regulatory Commission to protect the interests of minority investors. Taking the popularity of the CSISC as a quasi-natural experiment, we find that CSISC shareholding significantly promotes corporate risk-taking. We also find that this positive effect is more pronounced when the controlling shareholder has a lower shareholding ratio or the counterbalancing force of other shareholders is larger. Large cash holdings and financial capacity, fierce market competition, and being in a non-high-tech industry also strengthen the role of the CSISC. Further, our analysis of the economic consequences of CSISC shareholding demonstrates that it can improve investment efficiency, constrain insiders' tunnelling activities, and improve information quality. Overall, the results shed light on the effectiveness of the CSISC in increasing investor activism and restraining insiders' risk aversion. As such, our findings have policy implications for the protection of minority investors.

Can ESG certification help company get out of over-indebtedness? Evidence from China

Using Chinese listed companies from 2007 to 2019 as a sample, we employ a fixed-effect panel model to provide empirical evidence between ESG and company over-indebtedness. The results show that, benefiting from ESG certification, both firms' leverage scale and incidence of over-indebtedness are inhibited. After controlling for potential endogeneity and measurement bias, this finding remains robust. Heterogeneity analysis shows that the positive effect of ESG on company over-indebtedness is affected by both micro and macro factors, showing more significant impact for companies with higher debt levels, non-innovative companies, non-highly polluting companies, and companies in eastern regions. Moreover, mechanism analysis suggests that the driving force behind this phenomenon is that ESG certification effectively relaxes financing constraints and enhances stock liquidity. Moreover, we discuss the economic implications of the positive effect of ESG on company over-indebtedness and find that the resulting moderating effect promotes companies' cross-regional investment and improves investment efficiency. This paper has important practical implications for revealing the value of ESG certification and provides useful insights into ways of getting out of over-indebtedness for companies in emerging market countries.

ESG performance, auditing quality, and investment efficiency: Empirical evidence from China.

Dramatic changes in the business environment have created demands for additional information such as management discussions, governance information, and financial statement notes that go beyond the coverage of traditional financial reporting. Environmental, social, and governance (ESG) information can help gain stakeholder trust, reduce transaction costs, and improve investment efficiency. Taking Chinese A-share listed companies from 2011 to 2020 as a sample, we run fixed effect regressions to test the effect of ESG performance on investment efficiency. ESG performance is measured with the ESG score from the Bloomberg database. The results show that (a) good ESG performance significantly improves investment efficiency, (b) auditing quality partially mediates the relationship between ESG performance and investment efficiency, and (c) the role of ESG performance is stronger in non-state-owned enterprises, undeveloped regions, and firms with low accounting information quality. This paper contributes to the literature on ESG performance and provides references for ESG practice and sustainable corporate development in emerging countries.

Is “Well-Paid Employment” Worth It? Evidence from Corporate Investment in China

ABSTRACT This study investigates the effect of employee compensation on corporate investment decisions using a sample of Chinese listed companies during the period 2007–2019. We find that the improvement of employee compensation competitiveness reduces the overall investment level, but improves the investment efficiency, which supports the capital-skill complementarity theory and the liquidity constraint theory, rather than the displacement theory. We use the social insurance law as a quasi-natural experiment, and the adjustment of the personal income tax rate as an instrumental variable to relieve the endogeneity concern. In addition, cross-sectional analysis and mechanism analysis show that employee compensation competitiveness can crowd out enterprise investment and improve investment efficiency by increasing liquidity constraints, thereby improving the quality of human capital and increasing innovation. Overall, this study provides insights into how employee compensation reduces corporate investment and increases corporate investment efficiency in developing countries.

Can non-audit services from shared auditors in the supply chain mitigate the impact of the bullwhip effect on investment efficiency?

Amplified demand variability along the supply chain due to the bullwhip effect often leads to a mismatch between actual and planned demand. We study whether this demand distortion leads to less efficient investments for upstream suppliers than for downstream suppliers in the supply chain and whether this effect can be mitigated by non-audit services (NAS) provided by a shared auditor – an auditor that provides audit services to both a supplier and its major customer. Using a dataset of firms in different tiers of the supply chain, we find that suppliers farther upstream in the supply chain tend to have lower investment efficiency. However, upstream suppliers can mitigate this negative impact by purchasing NAS from a shared auditor in the supply chain. We find that the mitigating effect of NAS provided by a shared auditor is driven mainly by tax-related NAS, which is consistent with the notion that tax-related NAS improve investment efficiency by enhancing the design of business processes. Further supporting this interpretation, we show that upstream suppliers with a greater need for improved business processes, such as those with longer operating cycles and less bargaining power over customers, benefit more from purchasing tax-related NAS from a shared auditor. Overall, we identify a novel consequence of the bullwhip effect for the supply chain, namely reduced investment efficiency for upstream suppliers, and demonstrate that NAS provided by a shared auditor in the supply chain can mitigate this negative impact.

Research on the Efficiency and Influencing Factors of Korea's Foreign Direct Investment in RCEP Partners

Purpose - In this paper, we, taking South Korea's foreign direct investment in RCEP partners as an example, will examine its investment efficiency in these countries and analyze the main influencing factors, making suggestions for further liberalizing and facilitating its investment in and even for promoting its trade and economic cooperation with them.
 Design/methodology - In this study, we look at the panel data of South Korea and the other 13 RCEP countries (Brunei excluded) from 2000 to 2019 and apply the stochastic frontier analysis to measure its foreign direct investment efficiency and explore the influencing factors in RCEP countries. We examine the investment potential of South Korea in these places.
 Findings - We find that South Korea's average investment efficiency in RCEP countries reached 0.62, indicating large investment potential. We also find that its investment efficiency in RCEP partners was heterogeneous. Our study reveals that South Korea’s foreign direct investment is significantly positively correlated with the market size and population of the two countries, as well as with whether the host country has a coastline and rich natural resources, while negatively with geographic distance. It shows that free trade agreements, economic freedom, and regulatory quality play significant roles in improving investment efficiency.
 Originality/value - Through theoretical and empirical analysis, we deal with the efficiency and influencing factors of South Korea's direct investment in RCEP partners, proposing new drivers for facilitating its trade and investment in these countries and comprehensively evaluating the efficiency and revealing the trend of its FDI in these countries. In this paper, we put forward a solid theoretical basis for empirical analysis of the future economic and trade development between South Korea and its RCEP partners and give objective insights for further improving its foreign direct investment efficiency and tapping its investment potential.

Striving to improve investment efficiency among Chinese firms: does the role of venture capital matter?

PurposeThis study aims to investigate the impact of venture capital (VC) involvement on investment efficiency (IE) and its potential action mechanisms from the perspective of financial resource allocation.Design/methodology/approachUsing data of Chinese firms between 2008 and 2020, and the propensity score matching–difference in differences method, the authors investigate the relationship between VC and IE.FindingsThe results show that VC involvement significantly promotes IE, and the effect exhibits an inverted U-shape dynamic over time. The authors find two mechanisms through which VC promotes IE: alleviating financing constraints and improving corporate governance. Supplementary tests indicate that VC institutions with high reputations play a significant role in enhancing IE; the promotion effect is more pronounced for firms in non-high-tech industries, firms facing higher industrial competition and firms located in areas with better property rights protection systems.Originality/valueThis study provides several original contributions. First, based on principal–agent and financing constraint theories, this study enhances the literature by revealing how VC drives the IE of newly public firms in China. Second, to the best of the authors’ knowledge, this is the first attempt to identify the mechanisms between VC and IE; Third, from an empirical perspective, besides discussing the average and dynamic effect of VC on IE, this study also explores the impact of the interaction between VC and market competition and property rights protection on IE.

Development vs. political views of government ownership: How does it affect investment efficiency?

This study connects the development view and political view of government ownership with the firm life cycle theory to explain firms’ investment efficiency. We find that government ownership of firms in the introduction and decline stages is driven by the development view that improves investment efficiency. However, consistent with the political view, higher government ownership worsens firms' investment efficiency in the growth and mature stages. For firms in these two stages, we also find a significant threshold effect of government ownership on investment efficiency. Our results imply that the government's participation objective is different based on the firms’ development stages.

Geographic proximity and corporate investment efficiency: Evidence from high-speed rail construction in China

Applying the difference-in-differences method, we show that high-speed rail (HSR) construction improves investment efficiency in China. The effect is more pronounced for companies with low information transparency and low media coverage, suggesting that HSR can mitigate information asymmetry while reducing external regulatory costs. Our analysis also shows that the effect is more powerful for non-state-owned enterprises, high-growth firms, and those companies located in core cities. Overall, our findings suggest that HSR can improve investment efficiency by shortening the travel time between firms and their investors.