A balancing act: Managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market

作者：Alessandra Guariglia, Junhong Yang · 发表于：Journal of Corporate Finance · 年份：2015 · DOI：10.1016/j.jcorpfin.2015.10.006 · 被引用次数：244 · 研究领域：Corporate Finance and Governance、Financial Markets and Investment Strategies、Housing Market and Economics

Using a large panel of Chinese listed firms over the period 1998–2014, we document strong evidence of investment inefficiency, which we explain through a combination of financing constraints and agency problems. Specifically, we argue that firms with cash flow below (above) their optimal level tend to under- (over-)invest as a consequence of financial constraints (agency costs). Furthermore, focusing on under-investing firms, we highlight that the sensitivities of abnormal investment to free cash flow rise with traditionally used measures of financing constraints, while for over-investing firms, the sensitivities increase with a wide range of firm-specific measures of agency costs.