DO THE INVESTMENT DISTORTIONS AFFECT THE PERFORMANCE OF NONFINANCIAL FIRMS OF PAKISTAN

http://dx.doi.org/10.31703/gssr.2021(VI-II).39      10.31703/gssr.2021(VI-II).39      Published : Jun 2
Authored by : Sameen Aftab , Faisal Rizwan , Abdul Rashid

39 Pages : 392 - 405

References

  • Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51. https://doi.org/10.1016/0304- 4076(94)01642-d
  • Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277. https://doi.org/10.2307/2297968
  • Barro, R. J. (1990). The stock market and investment. The Review of Financial Studies, 3(1), 115-131.
  • Bates, T. W. (2005). Asset Sales, Investment Opportunities, and the Use of Proceeds. The Journal of Finance, 60(1), 105–135. https://doi.org/10.1111/j.1540- 6261.2005.00726.x
  • Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency?. Journal of Accounting and Economics, 48(2), 112-131.
  • Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115-144.
  • Bushman, R. M., & Smith, A. J. (2001). Financial accounting information and corporate governance. Journal of Accounting and Economics, 32(1), 237-333.
  • Chen, J. J. (2004). Determinants of capital structure of Chinese-listed companies. Journal of Business Research, 57(12), 1341– 1351. https://doi.org/10.1016/s0148- 2963(03)00070-5
  • Chen, X., Harford, J., & Li, K. (2007). Monitoring: Which institutions matter?. Journal of Financial Economics, 86(2), 279-305.
  • Chen, X., Sun, Y., & Xu, X. (2016). Free cash flow, over-investment and corporate governance in China. Pacific-Basin Finance Journal, 37(C), 81-103.
  • Cho, M. H. (1998). Ownership structure, investment, and the corporate value: an empirical analysis. Journal of Financial Economics, 47(1), 103-121.
  • Fama, E. F., & French, K. R. (2006a). Profitability, Investment, and Average Returns. Journal of Financial Economics, 82, 491–518.
  • Farooq, S., Ahmed, S., & Saleem, K. (2015). Overinvestment, growth opportunities and firm performance: Evidence from Singapore stock market. Corporate Ownership & Control, 12(3), 454-467.
  • Fu, F. (2010). Overinvestment and the operating performance of SEO firms. Financial Management, 39(1), 249-272.
  • Gu, L. (2013). Three Essays on Financial Economics. University of Illinois, Urbana- Champaign.
  • Guariglia, A., & Liu, P. (2014). To what extent do financing constraints affect Chinese firms' innovation activities?. International Review of Financial Analysis, 36, 223-240.
  • Guariglia, A., & Yang, J. (2016). A balancing act: Managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market. Journal of Corporate Finance, 36, 111-130.
  • Guariglia, A., & Yang, J. (2016). A balancing act: managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market. Journal of Corporate Finance, 36, 111-130.
  • He, W., & Kyaw, N. A. (2018). Ownership structure and investment decisions of Chinese SOEs. Research in International Business and Finance, 43, 48-57.
  • Hubbard, R. G. (1997). Capital-market imperfections and investment (No. w5996). National Bureau of Economic Research.
  • Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323- 329.
  • Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. The Journal of Finance, 48(3), 831-880.
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
  • Kadioglu, E., & Yilmaz, E. A. (2017). Is the free cash flow hypothesis valid in Turkey?. Borsa Istanbul Review, 17(2), 111-116.
  • Lamont, O. A. (2000). Investment plans and stock returns. The Journal of Finance, 55(6), 2719-2745.
  • Liu, N., & Bredin, D. (2010). Institutional Investors, Over-investment and Corporate Performance. University College Dublin.
  • Love, I. (2003). Financial development and financing constraints: International evidence from the structural investment model. The Review of Financial Studies, 16(3), 765-791.
  • Love, I., & Zicchino, L. (2006). Financial development and dynamic investment behavior: Evidence from panel VAR. The Quarterly Review of Economics and Finance, 46(2), 190-210.
  • McConnell, J. J., & Muscarella, C. J. (1985). Corporate capital expenditure decisions and the market value of the firm. Journal of Financial Economics, 14(3), 399-422
  • Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147-175.
  • Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
  • Nghia, N. T., Khang, T. L., & Thanh, N. C. (2019, January). The Moderation Effect of Debt and Dividend on the Overinvestment- Performance Relationship. In International Econometric Conference of Vietnam. 1109- 1120. Springer, Cham.
  • Richardson, S. (2006). Over-investment of free cash flow. Review of Accounting Studies, 11(2-3), 159-189.
  • Shima, K. (2010). Lumpy capital adjustment and technical efficiency. Economics Bulletin, 30(4), 2817-2824.
  • Shleifer, A., & Vishny, R. W. (1989). Management entrenchment: The case of manager- specific investments. Journal of Financial Economics, 25(1), 123-139.
  • Stiglitz, J. E., & Weiss, A. (1981). Credit rationing in markets with imperfect information. The American Economic Review, 71(3), 393- 410.
  • Stulz, R. (1990). Managerial discretion and optimal financing policies. Journal of Financial Economics, 26(1), 3-27.
  • Thuong, C. V., Thanh, N. C., & Khang, T. L. (2019, January). The Firm Performance– Overinvestment Relationship Under the Government’s Regulation. In International Econometric Conference of Vietnam (pp. 1142-1153). Springer, Cham.
  • Titman, S., Wei, K. J., & Xie, F. (2004). Capital investments and stock returns. Journal of Financial and Quantitative Analysis, 39(4), 677-700.
  • Yang, W. (2005). Corporate investment and value creation. Indiana University Bloomington.

References

  • Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51. https://doi.org/10.1016/0304- 4076(94)01642-d
  • Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277. https://doi.org/10.2307/2297968
  • Barro, R. J. (1990). The stock market and investment. The Review of Financial Studies, 3(1), 115-131.
  • Bates, T. W. (2005). Asset Sales, Investment Opportunities, and the Use of Proceeds. The Journal of Finance, 60(1), 105–135. https://doi.org/10.1111/j.1540- 6261.2005.00726.x
  • Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency?. Journal of Accounting and Economics, 48(2), 112-131.
  • Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115-144.
  • Bushman, R. M., & Smith, A. J. (2001). Financial accounting information and corporate governance. Journal of Accounting and Economics, 32(1), 237-333.
  • Chen, J. J. (2004). Determinants of capital structure of Chinese-listed companies. Journal of Business Research, 57(12), 1341– 1351. https://doi.org/10.1016/s0148- 2963(03)00070-5
  • Chen, X., Harford, J., & Li, K. (2007). Monitoring: Which institutions matter?. Journal of Financial Economics, 86(2), 279-305.
  • Chen, X., Sun, Y., & Xu, X. (2016). Free cash flow, over-investment and corporate governance in China. Pacific-Basin Finance Journal, 37(C), 81-103.
  • Cho, M. H. (1998). Ownership structure, investment, and the corporate value: an empirical analysis. Journal of Financial Economics, 47(1), 103-121.
  • Fama, E. F., & French, K. R. (2006a). Profitability, Investment, and Average Returns. Journal of Financial Economics, 82, 491–518.
  • Farooq, S., Ahmed, S., & Saleem, K. (2015). Overinvestment, growth opportunities and firm performance: Evidence from Singapore stock market. Corporate Ownership & Control, 12(3), 454-467.
  • Fu, F. (2010). Overinvestment and the operating performance of SEO firms. Financial Management, 39(1), 249-272.
  • Gu, L. (2013). Three Essays on Financial Economics. University of Illinois, Urbana- Champaign.
  • Guariglia, A., & Liu, P. (2014). To what extent do financing constraints affect Chinese firms' innovation activities?. International Review of Financial Analysis, 36, 223-240.
  • Guariglia, A., & Yang, J. (2016). A balancing act: Managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market. Journal of Corporate Finance, 36, 111-130.
  • Guariglia, A., & Yang, J. (2016). A balancing act: managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market. Journal of Corporate Finance, 36, 111-130.
  • He, W., & Kyaw, N. A. (2018). Ownership structure and investment decisions of Chinese SOEs. Research in International Business and Finance, 43, 48-57.
  • Hubbard, R. G. (1997). Capital-market imperfections and investment (No. w5996). National Bureau of Economic Research.
  • Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323- 329.
  • Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. The Journal of Finance, 48(3), 831-880.
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
  • Kadioglu, E., & Yilmaz, E. A. (2017). Is the free cash flow hypothesis valid in Turkey?. Borsa Istanbul Review, 17(2), 111-116.
  • Lamont, O. A. (2000). Investment plans and stock returns. The Journal of Finance, 55(6), 2719-2745.
  • Liu, N., & Bredin, D. (2010). Institutional Investors, Over-investment and Corporate Performance. University College Dublin.
  • Love, I. (2003). Financial development and financing constraints: International evidence from the structural investment model. The Review of Financial Studies, 16(3), 765-791.
  • Love, I., & Zicchino, L. (2006). Financial development and dynamic investment behavior: Evidence from panel VAR. The Quarterly Review of Economics and Finance, 46(2), 190-210.
  • McConnell, J. J., & Muscarella, C. J. (1985). Corporate capital expenditure decisions and the market value of the firm. Journal of Financial Economics, 14(3), 399-422
  • Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147-175.
  • Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
  • Nghia, N. T., Khang, T. L., & Thanh, N. C. (2019, January). The Moderation Effect of Debt and Dividend on the Overinvestment- Performance Relationship. In International Econometric Conference of Vietnam. 1109- 1120. Springer, Cham.
  • Richardson, S. (2006). Over-investment of free cash flow. Review of Accounting Studies, 11(2-3), 159-189.
  • Shima, K. (2010). Lumpy capital adjustment and technical efficiency. Economics Bulletin, 30(4), 2817-2824.
  • Shleifer, A., & Vishny, R. W. (1989). Management entrenchment: The case of manager- specific investments. Journal of Financial Economics, 25(1), 123-139.
  • Stiglitz, J. E., & Weiss, A. (1981). Credit rationing in markets with imperfect information. The American Economic Review, 71(3), 393- 410.
  • Stulz, R. (1990). Managerial discretion and optimal financing policies. Journal of Financial Economics, 26(1), 3-27.
  • Thuong, C. V., Thanh, N. C., & Khang, T. L. (2019, January). The Firm Performance– Overinvestment Relationship Under the Government’s Regulation. In International Econometric Conference of Vietnam (pp. 1142-1153). Springer, Cham.
  • Titman, S., Wei, K. J., & Xie, F. (2004). Capital investments and stock returns. Journal of Financial and Quantitative Analysis, 39(4), 677-700.
  • Yang, W. (2005). Corporate investment and value creation. Indiana University Bloomington.

Cite this article

APA

    APA : Aftab, S., Rizwan, F., & Rashid, A. (2021). Do the Investment Distortions Affect the Performance of Non-financial Firms of Pakistan?. Global Social Sciences Review, VI(II), 392 - 405. https://doi.org/10.31703/gssr.2021(VI-II).39

CHICAGO

    CHICAGO : Aftab, Sameen, Faisal Rizwan, and Abdul Rashid. 2021. "Do the Investment Distortions Affect the Performance of Non-financial Firms of Pakistan?." Global Social Sciences Review, VI (II): 392 - 405 doi: 10.31703/gssr.2021(VI-II).39

HARVARD

    HARVARD : AFTAB, S., RIZWAN, F. & RASHID, A. 2021. Do the Investment Distortions Affect the Performance of Non-financial Firms of Pakistan?. Global Social Sciences Review, VI, 392 - 405.

MHRA

    MHRA : Aftab, Sameen, Faisal Rizwan, and Abdul Rashid. 2021. "Do the Investment Distortions Affect the Performance of Non-financial Firms of Pakistan?." Global Social Sciences Review, VI: 392 - 405

MLA

    MLA : Aftab, Sameen, Faisal Rizwan, and Abdul Rashid. "Do the Investment Distortions Affect the Performance of Non-financial Firms of Pakistan?." Global Social Sciences Review, VI.II (2021): 392 - 405 Print.

OXFORD

    OXFORD : Aftab, Sameen, Rizwan, Faisal, and Rashid, Abdul (2021), "Do the Investment Distortions Affect the Performance of Non-financial Firms of Pakistan?", Global Social Sciences Review, VI (II), 392 - 405

TURABIAN

    TURABIAN : Aftab, Sameen, Faisal Rizwan, and Abdul Rashid. "Do the Investment Distortions Affect the Performance of Non-financial Firms of Pakistan?." Global Social Sciences Review VI, no. II (2021): 392 - 405. https://doi.org/10.31703/gssr.2021(VI-II).39