Investment Efficiency Research Articles

A Haavelmo grey model based on economic growth and its application to energy industry investments

The energy industry is a major source of greenhouse gas emissions, and energy investment is an important regulatory tool to encourage the energy industry to actively respond to climate change and achieve low-carbon development. Therefore, it is of great practical significance to correctly understand the important role of the energy industry, to predict energy investments objectively and accurately, to achieve scientific and rational investment, and make policy recommendations for the energy production and consumption revolution. In this paper, the Haavelmo model of economic growth is introduced into the energy system, using the characteristics of the continuous form of the model to establish the differential equations for the dynamics of fixed asset investment in the energy industry, and Haavelmo's grey prediction model using the grey difference information principle. Meanwhile, the Python program is used to solve the parameters of the new model, and the mathematical transformation is used to find the time response equation of the new model, and the modeling steps and the modeling flow chart of the model are obtained. Finally, the new model will be applied to two types of energy investments in China: total energy industry investment and investment in electricity, steam, hot water production, and supply industry. Both types of energy use the same modeling object and forecast object, and six cases are compared with three grey forecasting models from different perspectives, and their results show that they are much better than the other three grey forecasting models, demonstrating the effectiveness of the new model to effectively forecast energy investments and improve the efficiency of energy industry investments, cultivate healthy and environmentally friendly energy consumption habits.

FEATURES OF INNOVATIVE AND INVESTMENT DEVELOPMENT OF ENTERPRISES IN THE AGRICULTURAL SECTOR

The presence of a sufficient number of different forms of ownership and forms of management in the agricultural sector complicates the mechanism of financial investment in enterprises of the appropriate profile. It also affects investment processes in the agricultural sector. Stimulating investments in the agricultural sector has a decisive impact on both agriculture and the development of the economy in general. In the agrarian policy of Ukraine, as in the agrarian policy of developed countries, increasing investment attractiveness is one of the priorities. Of course, economic development is impossible without investments. From this point of view, the question of forming a financing mechanism for the sustainable development of agriculture remains relevant. Currently, investment growth is one of the main conditions for meeting the demand for high technologies, which is determined by the need for intensive development of agriculture. Low investment activity in the past years, the scale of investments in the fixed capital of agriculture do not meet the real needs of renewal and modernization of production. Therefore, the most urgent task for the development of the agricultural industry is the formation of a favorable investment climate and the activation of investment activities of all business entities. This is possible mainly on the basis of increasing investment activity while simultaneously increasing the efficiency of investment, especially innovative, which is very important in the conditions of limited resources necessary for rational financing of the development of agricultural production. Investments increase production productivity, increase the availability of food in the market and help keep prices low, making food more affordable for rural and urban consumers. Also, investments in agriculture reduce the vulnerability of food supplies to shocks, contributing to the stability of consumption. A favorable investment climate helps mobilize capital, skills, technology, and intermediate resources that enable firms to expand, thereby helping to direct resources to more productive uses.

MAPPING THE INVESTMENT EFFICIENCY: A CO-CITATION ANALYSIS

This research pioneers a shift in investment efficiency exploration by transcending traditional measurement approaches. The study identifies three main research areas: (1) Factors influencing investment efficiency, (2) Competition, green Research and Development (R&D) and cooperation in the supply chain, and (3) Environmental and renewable considerations in investment efficiency. This is achieved through a document co-citation analysis of 38 highly cited documents. Multidimensional scaling visually maps the intellectual landscape, emphasising the dominance of factors influencing investment efficiency. A 10-year analysis reveals dynamic trends with implications for financial transparency, strategic ownership, social responsibility and technological advancements. The study offers actionable insights for scholars and practitioners, emphasising the necessity of aligning financial goals with sustainability. Despite acknowledged limitations related to data source bias, this research contributes a nuanced understanding of investment efficiency trends, paving the way for future explorations in this vital domain.

Corporate ESG performance and human capital investment efficiency

We discuss the mechanism of the influence of enterprise ESG performance on the efficiency of enterprise human capital investment. Through empirical model research, the paper finds a compelling correlation: the greater the ESG performance, the higher the efficiency of enterprise human capital investment. Furthermore, the study reveals that enterprise ESG performance not only enhances the efficiency of human capital investment but also bolsters the competitive advantage of enterprise products. Additionally, the study underscores that enterprise ESG performance serves as a catalyst for augmenting enterprise reputation, which in turn leads to improved efficiency in human capital investment.

Pengaruh Mediasi Efesiensi Investasi pada Hubungan Corporate Governance dan Kinerja Keuangan BUMN di Indonesia Periode Sebelum Pandemi

Implementation of Corporate Governance (CG) is closely related to efficient investment decisions to drive financial performance, but several State-Owned Enterprises (SOEs) in Indonesia are indicated to have inefficient investments. This study aims to examine the impact of CG on financial performance, and the role of investment efficiency as a mediation between CG and financial performance. The sample comprises 10 SOEs listed on the Indonesia Stock Exchange for the 2013-2019 period since the publication of the SOE regulations regarding CG assessment indicators in 2012. The analysis method uses panel data regression analysis. The results of the study found that the CG index reduced financial performance and the level of investment efficiency. These results do not confirm the resource-based theory because a high CG score results in inefficient investment (over/under investment) and lowers financial performance. In addition, investment efficiency is not able to mediate the effect of CG on financial performance due to the different industrial sectors in the sample having different investment needs. The implication of this research is the need to expand investment space for companies as well as monitor to implement various management policies by the Ministry of SOEs

Pension insurance contribution rate and corporate investment efficiency

This study identifies the pension insurance contribution rate as an important factor affecting corporate investment efficiency. Empirical research findings reveal a significant crowding-out effect between the pension insurance contribution rate and corporate investment efficiency. That is, the higher the pension insurance contribution rate, the more pronounced the crowding-out effect on corporate investment efficiency. Further analysis of heterogeneity indicates that the crowding-out effect of the pension insurance contribution rate on corporate investment efficiency is more pronounced in non-state-owned enterprises and in enterprises with higher financing constraints.

Efficient solutions for vector optimization problem on an extended interval vector space and its application to portfolio optimization

In this paper, a generalized interval vector space is investigated and defined as an ordered relation in the form of a bijective linear transformation of its onto a real vector space. The ordered relation is utilized to formulate an interval optimization problem in the same manner as a classical multi-objective programming problem. A methodology that addresses the existence of efficient solutions for the multi-objective interval optimization problem has also been discussed. Various numerical examples are described to illustrate and substantiate all developed concepts. Furthermore, the multi-objective portfolio rebalancing problem for a time horizon is designed based on the developed interval vector optimization. An algorithm using exhaustive solution technology has been proposed to achieve an efficient investment strategy. Finally, its applicability and efficacy are analyzed using Bombay Stock Exchange India data sets.

The influence of financial flexibility on firm performance: the moderating effects of investment efficiency and investment scale

PurposeFinancial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines the moderating effects of investment efficiency and investment scale on the relationship between financial flexibility and firm performance.Design/methodology/approachThe authors use sample of 10,755 US-listed firms over the period 2010–2021 to examine the relationships between investment scale, investment efficiency, financial flexibility and firm performance. Particular attention is paid to overinvestment and underinvestment.FindingsFindings of this study reveal that financial flexibility mitigates investment inefficiency through reducing overinvestment. Financial flexibility contributes to boost a firm’s accounting and market performance. Additionally, investment efficiency and investment scale have moderating effects on the relationship between financial flexibility and firm performance. However, the influence of investment efficiency is greater than the influence of investment scale. Finally, the authors find that the direct and indirect effects of financial flexibility are stronger on market performance than accounting performance, implying that market is more sensitive to corporate financial policies.Research limitations/implicationsFindings of this study have implications for scholars, decision-makers policymakers, investors and other stakeholders.Practical implicationsThis study has its own limitations due to the sample selection issues, country context and the research model adopted by this study.Originality/valueThe novel contribution to the extant literature is incorporating the influence of investment scale and investment efficiency into the relationship between financial flexibility and firm performance.

The efficiency analysis of media companies: An application of DEA and Malmquist indices

As the global entertainment and media market is expected to multiply, media companies, such as streaming services, television networks, and broadcasting companies, play critical roles in providing TV and movie content, the industry's fuel. Almost all players of small and large sizes in the industry spend enormous resources on content and expand their investment to retain global and regional content to win the battle of viewership. However, the efficiency of investments varies for media companies. Measuring efficiency has been crucial as all firms strive to achieve better productivity. In particular, estimating the efficiencies and productivities of firms producing and offering intangible assets, such as TV and movie content, and valuing the content on firm performance are challenging. With our longitudinal data about local and global media companies from 2019 to 2022, we first used a Data Envelopment Analysis (DEA) to answer which firms in the media industry have effectively exploited their resources to achieve better firm performance. In addition, with the Malmquist analysis, we show how the efficiencies and productivity of content providers change along with the dynamics of the media industry that the media industry has recently faced. Our understanding of the global media companies' efficiencies from diverse perspectives offers several theoretical and practical implications for the streams of efficiencies and competition in the media industry.

De-familiarization governance and family firm investment efficiency

Investment efficiency is a bottleneck problem in the development of Chinese family enterprises. The study takes Chinese family-listed companies as samples to explore the impact of de-familiarization governance on investment efficiency of these firms. It is found that de-familiarization governance can effectively improve investment efficiency of enterprises, and this effect is particularly pronounced in the context of environmental uncertainty. Mechanism tests reveal that de-familiarization governance improves the investment efficiency of family businesses by enhancing managerial ability and promoting digitalization. Further analysis shows that in the context of relatively low industry competitiveness, the positive effect of de-familiarization governance on investment efficiency is more significant. The conclusions enhance our understanding of dynamic development and behavioral impact of family business governance within the current economic context, and provide new insights for family businesses seeking to enhance investment efficiency and undergo transformation and upgrading.

Retail shareholder activism and investment efficiency

This study investigates the impact of retail shareholder activism on firm level investment efficiency. I find the online activism significantly improve firms' investment efficiency, and this effect is primarily driven by the mitigation of under-investment problem. The results are valid to a series of robust tests. Mechanism analysis indicates that retail shareholder activism mainly plays its role by disciplining hedonic managers and reducing information asymmetry. Finally, I find the impact is heterogeneous according to the characteristics of the activity and firm's responses. Collectively, the findings help to understand the governance effect of retail shareholder activism in weak investor protection countries.

Threat or opportunity? Unveiling the impact of population aging on corporate labor investment efficiency

This study examines the impact of population aging on labor investment efficiency in Chinese listed firms from 2009 to 2020. Our main findings reveal that aging can positively influence labor investment efficiency, particularly in firms with labor redundancies such as state-owned enterprises, those with labor unions, high labor costs, and financial constraints. The positive effect is lessened in regions with abundant human capital, within the manufacturing sector, and labor-intensive industries. The results show that improvements in labor efficiency are distinct from changes in capital investment efficiency, indicating no general rebalancing of resources due to demographic shifts. Firms with limited investment opportunities and under strict external monitoring benefit more from an aging workforce. Overall, our findings suggest that an aging population can offer opportunities for firms to enhance labor investment efficiency, challenging the conventional view of population aging as solely a threat.

Unveiling the enigma: Exploring how uncertain crude oil prices shape investment expenditure and efficiency in Chinese enterprises

As a crucial energy resource, crude oil plays a vital role in propelling global economic progress. China's energy consumption is extensive due to its position as the second-largest global economy and leading importer of crude oil. A stable crude oil supply can support China's steady economic growth. The China Crude Oil Futures (INE) launch in 2018 has enriched the WTI and Brent crude oil market systems, further consolidating the critical position of crude oil in China's economic and financial development. Therefore, this paper first examines the impact of crude oil price uncertainty on the investment activities of Chinese micro-enterprises by selecting three crude oil futures: WTI, Brent, and INE. Based on the quarterly (half-year) report of Shanghai and Shenzhen A-share listed enterprises from 2008 to 2023, this study examines the effects of uncertainty in crude oil prices on investment spending and efficiency inside enterprises and the underlying mechanisms that drive these effects. This study provides evidence that the fluctuation in crude oil prices has a detrimental impact on investment expenditure, while concurrently improving the investment efficiency of enterprises. The mechanism test also demonstrates that the volatility of crude oil prices has the potential to diminish investment expenditure and enhance the investment efficiency of enterprises. On the macro level, it mainly depends on reducing the macroeconomic boom index, enterprise boom index, and entrepreneur confidence index. At the micro level, it relies on increasing enterprise cash flow, lowering enterprise investment expectations and consumer product demand. Further heterogeneous analysis indicates that during significant events such as the global COVID-19 pandemic and the Russia-Ukraine conflict, there is a substantial increase in crude oil price uncertainty, leading to reduced enterprise investment expenditure and improved enterprise investment efficiency. Furthermore, the volatility associated with the increase in oil prices has a more pronounced effect on investment outlays and operational effectiveness. Moreover, the volatility of crude oil prices significantly influences the investment expenditure and investment efficiency of enterprises in the secondary industry and non-state-owned sectors. This empirical study examined the causal relationship between crude oil price, investment spending, and investment efficiency. The results of this investigation enhance the current scholarly knowledge on the relationship between crude oil prices and investment, so contributing to the advancement and refinement of this particular field of inquiry. This paper makes a valuable exploration and attempt to explain the mechanism of the impact of crude oil price on the investment activities of micro-enterprises.

Excess control of family board seats and corporate innovation

AbstractWe examine the impact of board‐level control on corporate innovation in family firms. We find that excess control of family board seats (ECFBS) is negatively correlated with innovation investment, innovation output and innovation efficiency. Our findings suggest that ECFBS exacerbates type II agency problems. Mechanistic analyses show that ECFBS reduces firms’ risk‐taking level, increases their financing constraints and damages channels for acquiring innovative professional knowledge. We also observe that effect of ECFBS on innovation is associated with family origin, familiarization time and family management characteristics. Our findings should be of interest to family firm manager investors and lenders who are interested in family governance mechanisms.

Customer Concentration and Labor Investment Efficiency: Evidence from China

ABSTRACT: The labor force constitutes a paramount factor of production in the realm of business operations. In the past, China's abundant labor force significantly boosted productivity for firms. However, as the demographic dividend gradually wanes, concerns have arisen regarding a scarcity of labor force, exacerbating worries about rising labor costs. Therefore, focusing on enhancing firms' labor investment efficiency becomes pivotal. Using a sample of A-stock listed firms in China from 2013 to 2020, we examine the impact of customer concentration on the labor investment efficiency of supplier firms. Prior literature provides mixed results regarding the effect of concentrated customers. They can act as a governance mechanism for reducing agency problems, thus, increasing investment efficiency. Conversely, agency problems are aggravated in suppliers with concentrated customers, consequently, reducing investment efficiency. Our results suggest that customer concentration reduces labor investment efficiency, and this effect is more pronounced when customers possess high bargaining power. Additionally, the mechanism analysis reveal that customer concentration leads to less accurate information disclosure, higher operating risk, and an incentive to "empire building", reducing labor investment efficiency. The cross-sectional analysis reveals that customer concentration results in both over- and under-investment in labor, thereby reducing investment efficiency. In addition, we employ augmented models to rule out the possibility of a U-shaped relationship between customer concentration and labor investment efficiency. Furthermore, we adopt the instrumental variables approach as well as a two-stage regression model to address potential endogeneity concerns and mitigate the omitted variable concern. Our results hold after the robustness tests and endogeneity tests. The findings of this paper imply that firms should strategically diversify their customer bases, thereby reducing their reliance on a few large customers. Simultaneously, governments should actively encourage firms to broaden their customer base. It can help enhance labor investment efficiency by spreading the risks associated with customer concentration. Moreover, it is crucial to acknowledge that substantial customer bargaining power can negatively impact supplier firms. Thus, policymakers should promote antitrust regulations and fair trade practices to mitigate the high bargaining power of large customers.

From performance to horizon: managements’ horizon and firms’ investment efficiency

PurposeThis study proposes a novel measure for management’s horizon (short-termism or myopia vs long-termism or hyperopia) derived from easily obtainable firm-level accounting and stock market performance data. The authors use the measure to explore the impact of managements’ horizon on firms’ investment efficiency.Design/methodology/approachThe authors rely on two commonly used but uncorrelated measures of management performance: accounting performance (return on capital employed, ROCE) and stock market performance (average abnormal return, AAR). The authors combine these measures to develop a multidimensional framework for performance, which classifies firms into four groups: efficient (high accounting and high market performance), poor (low accounting and low market performance), myopic (high accounting and low market performance) and hyperopic (low accounting and high market performance). The authors validate this framework and deploy it to explore the relationship between horizon and firms’ investment efficiency.FindingsIn validation tests, the authors show that management myopia (hyperopia) explains firms’ decision to cut (grow) research and development investments. Further, as expected, myopic (hyperopic) firms are associated with significantly more (less) accrual and real earnings management. The empirical tests on the link between horizon and investment efficiency suggest that myopic managers cut new investments while their hyperopic counterparts grow the same. Ultimately, the authors find that myopia (hyperopia) exacerbates(mitigates) the over-investment of free cash flow problem.Originality/valueThe authors introduce a framework for assessing management’s horizon using easily obtainable measures of performance. The framework explains inconsistencies in prior empirical research using different measures of performance (accounting versus market). The authors demonstrate its utility by showing that the measure explains decisions around research and development investment, earnings management and firm investments.

From apathy to activism: Shareholder dissent on director's pay proposals and board effectiveness

Using a hand-collected dataset of shareholder voting on 10,805 director compensation proposals at general shareholder meetings of Chinese listed firms from 2010 to 2019, we provide novel empirical evidence on board reactions to shareholder dissent. We find that boards of directors facing shareholder dissent significantly improve their monitoring and advising effectiveness. Specifically, they reduce the likelihood of financial restatements, improve CEO performance-turnover sensitivity, and improve corporate investment efficiency. Our findings are robust to propensity score matching, instrumental variable estimation and the exogenous shock of mandatory online voting. Moreover, independent directors facing dissent are more likely to vote against board proposals and to reduce their absences from board meetings. The mechanism analysis shows that shareholder dissent operates through the reputation concern and market signal channels. The effect of dissent is more prominent for non-SOEs, for firms with more high-profile directors, and for firms with less powerful CEOs. Besides, the improved board effectiveness induced by shareholder dissent leads to better firm performance. Overall, our findings highlight the role of shareholder voting in emerging markets with concentrated ownership and weak investor protection.

Investment efficiency of targeted S-curve industries: the roles of CEO duality and financial reporting quality

PurposeThe purpose of this study is to examine the association between the combined roles of chief executive officer (CEO)-chairman titles (CEO duality) and investment efficiency, defined as a lower deviation from expected investment for targeted S-curve firms used to propel an innovation-driven economy. This study also aims to investigate the moderating effect of financial reporting quality on this association.Design/methodology/approachThis paper focuses on the ten targeted S-curve industries – under the definition of the Thailand 4.0 model – listed on the Stock Exchange of Thailand (SET) from 2000 to 2019. Data related to CEO/chairman titles and investment supports were manually collected from the annual reports, the SET market analysis and reporting tool database and the company websites. Financial data used to estimate investment behaviors and discretionary accruals were extracted from 1999. The study analyzes unbalanced panel data using fixed-effects regressions. Additional tests embrace replacing the sample with nontargeted firms, partitioning into granted and nongranted firms, adding CEOs’ demographic moderators, using alternative variable measures and analyzing for lagged independent variables.FindingsThe main findings show that CEO duality reduces overinvestment but worsens underinvestment in targeted firms. Financial reporting quality (FRQ) appears to strengthen CEO duality in mitigating extreme spending but has no impact on the association between CEO duality and underinvestment. Additional results, for example, conclude that CEO duality has no association with both over- and underinvesting at nontargeted firms, but its effect becomes positively significant on overinvestment when financial reporting quality is high. The negative association between CEO duality and overinvestment is found only in government-granted and targeted firms. FRQ encourages CEO duality in lowering overinvestment among targeted firms without grants. CEOs’ female and serviced early years appear to elevate those main findings.Practical implicationsThese findings assist innovative corporations in choosing a proper leadership structure to cope with investment inefficiency. The research gives the government and regulatory bodies an insight into the qualifications of the leadership structure and financial information that helps them put forward effective policies.Originality/valueTo the best of the author’s knowledge, this study is among the first to establish the association between CEO duality and investment efficiency for innovation-driven firms in a transforming economy. The study fills the gap in the literature on management, accounting and finance by unveiling the interplay between dual leadership and financial reporting in affecting the efficiency of investments.

Asymmetric and time-frequency co-movements among innovation-themed investments and carbon emission efficiency: Thematic investing and hedging opportunities.

This study is aimed at investigating the asymmetric and time-frequency co-movements and the hedge or safe-haven properties of carbon efficient indices, the MSCI ACWI Sustainable Impact, and MSCI World EGS indices, in relation to technology and innovation-themed investments. In doing so, the ADCC-GJR-GARCH and wavelet coherence techniques are applied to a daily return series ranging from January 2019 to January 2023. Findings of the ADCC-GJR-GARCH model show negative and insignificant asymmetric linkage among underlying indices during the sample period. The S&P 500 carbon efficient index (CEI) acts as a strong hedge or safe-haven for technology and innovation-themed indices during tranquil and tumultuous periods. The MSCI ACWI Sustainable Impact, MSCI World EGS, and carbon efficient indices except for S&P 500 CEI exhibit weak hedge or safe-haven attributes. Wavelet coherence reveals negative (positive) co-movements between the thematic and carbon efficient indices in short-term (medium-term and long-term) horizons with consistent leading behavior of thematic indices to carbon efficient indices outcomes. It justifies the presence of short-lived hedging or safe-haven characteristics in the thematic domain for investors. These strong and weak hedge or safe-haven characteristics of low carbon and sustainability indices reveal that adding low carbon efficient and sustainable investments to a portfolio result in considerable diversification benefits for investors who tend to take minimal risk in both tranquil and tumultuous periods. The current findings imply that financial institutions, thematic investing companies, and governments need to encourage carbon efficient technology transfer and innovation-themed investments by increasing the fund allocations in underlying asset classes. Policy-making and regulatory bodies can encourage investors to make carbon-efficient and thematic investments and companies to issue carbon-efficient stocks or investments to safeguard social and economic risks during fragile periods. These investments can offer greater opportunities to combat the intensity of economic shocks on portfolios for responsible or sustainable investors.

Formation of Economic Sovereignty of the Russian Federation: Regional Aspect

The relevance of the research topic is determined by the development and improvement of the state policy for the formation of economic sovereignty of the Russian Federation. The import substitution policy implemented in recent years has yielded positive economic solutions that make it possible not to experience a shortage of goods and production components. With the support of federal and regional authorities, the subjects of economic sovereignty formation (special economic zones, industrial parks, industrial and innovation clusters, etc.) are actively developing. Purpose. The main purpose of the study is to substantiate promising areas for ensuring the economic sovereignty of the Russian Federation in the context of the development of regional investment infrastructure. Objectives: of the study are as follows: substantiation of the directions for ensuring economic sovereignty, analysis and assessment of investments in fixed assets of the regions of the Central Federal District, study of the rating of the subjects of the Central Federal District in terms of investments in fixed assets. Methodology. The methodological basis of the study was the works of domestic scientists in the field of theory and practice of economic policy, economic regulation, and increasing the stability of the economy in the face of sanctions. The results of the study show that the most promising areas for ensuring economic sovereignty are the financing of infrastructure and high-tech industries, the development and support of industrial parks, industrial clusters, the development of investment activity, including through the support of large investment projects, and increasing the efficiency of investments in fixed assets. Conclusions. The results of the study show that the most promising areas for ensuring economic sovereignty are the financing of infrastructure and high-tech industries, the development and support of industrial parks, industrial clusters, the development of investment activity, including through the support of large investment projects, and increasing the efficiency of investments in fixed assets.