Internal control quality, equity pledge financing and investment efficiency

Mu, Wen; Zhou, Yuetian; Cao, Qilin

doi:10.1088/1742-6596/1629/1/012081

Cited by 6 publications

(5 citation statements)

References 4 publications

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“…Meanwhile, some scholars believe that investment decisions are not only related to whether the company has equity pledging, but are also affected by the proportion of the equity pledge. Mu, Zhou, and Cao (2020) found that a company's investment decisions are highly correlated with the equity pledge ratio. Companies with low equity pledge ratios invest in operating activities to improve performance, and companies with high equity pledge ratios may adopt short-term investment strategies, such as financial investment, in order to prevent the transfer of control, with high returns and quick results.…”

Section: Equity Pledges and Corporate Investmentmentioning

confidence: 99%

“…Ke, Li, and Wu (2019) studied the types of corporate equity pledge affecting corporate investment behavior and found that the proportion of the equity pledge does not have a simple linear relationship with company investment, which shows that the controlling shareholders with different proportions of equity pledge adjust the company's investment strategy for different reasons. In order to prevent the transfer of shareholders' control, two types of inefficient investment-over-investment and under-investment-may result when the controlling shareholders make and implement investment decisions in the company (Mu et al, 2020). Moreover, risk tolerance affects investment efficiency, and the reduction of risk tolerance and equity pledging will inhibit risk investment.…”

Section: Equity Pledges and Corporate Investmentmentioning

confidence: 99%

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Do controlling shareholders' equity pledges affect M&A investment? Evidence from listed companies in China

Duan,

Nor,

Selamat

2023

5002

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As a new financing method, equity pledges are popular in China’s capital market. With the emergence of new financing models, will the relationship between financing and investment in corporate financial management change? The purpose of this study is to determine whether the controlling shareholders' equity pledges affect corporate merger and acquisition (M&A) investment decisions. This paper uses data for listed companies from the China Stock Market & Accounting Research (CSMAR) database, and Stata 17 is used as the data processing software. The M&A variable is virtual and uses the logit model to study the relationship between controlling shareholders' equity pledges and M&A investments. To test the robustness of the results, we replace the key variables, transform the model, and use the Gaussian Mixture Model (GMM) method to obtain the same results. The study found a positive correlation between controlling shareholders' equity pledges and M&A investments. Further cross-sectional study shows that the positive correlation is stronger in state-owned companies, non-manufacturing companies, and companies with low pledge ratios. This study is conducive to standardizing the equity pledge behavior of listed companies and safeguarding the interests of investors.

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Section: Equity Pledges and Corporate Investmentmentioning

confidence: 99%

Section: Equity Pledges and Corporate Investmentmentioning

confidence: 99%

Do controlling shareholders' equity pledges affect M&A investment? Evidence from listed companies in China

Duan,

Nor,

Selamat

2023

5002

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“…In the early literature on overinvestment, most of them were based on principal-agent theory, and did not pay attention to the impact of managers’ own irrational behavior on the investment decision and development of enterprises. Mu et al (2020) found that overconfident managers lack the ability to rationally analyze, and often misjudge the project’s net present value and rate of return, resulting in overinvestment. In addition, considering the effect of manager gender on this relationship, the overinvestment caused by overconfidence of male managers will be more serious ( Liu, 2022 ).…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of the influence of enterprise managers’ overconfidence on the overinvestment behavior of listed companies under the media reports

2022

Front. Psychol.

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At present, there is a common overinvestment behavior among listed companies in various countries, which seriously reduces the overall resource allocation efficiency of the market. With the rise of behavioral finance, it has become a new direction to study the influence of managers’ “irrational characteristics” on enterprise overinvestment. With the rapid rise of the media industry, media reporting, as an external governance mechanism, supplements the capital market supervision system and has a huge impact on the investment behavior of enterprises. How media reports affects overinvestment and whether it can curb overinvestment caused by managers’ overconfidence is still worthy of further study. This paper took 6,012 A-share listed companies from 2013 to 2021 as samples, and based on the perspective of “media reports,” studies the impact of managers’ overconfidence on overinvestment; explores whether positive and negative media reports have a moderating effect between overconfidence and overinvestment; studies the moderating effect of media reports under different marketization processes. Empirical conclusions: (1) Managers’ overconfidence will lead to overinvestment of enterprises. (2) Positive media reports will aggravate the overinvestment caused by managers’ overconfidence; negative reports can inhibit the overinvestment caused by managers’ overconfidence. (3) In regions with higher marketization, positive media reports play a more significant role in aggravating overconfidence and leading to overinvestment; in regions with lower marketization, negative reports play a stronger role in restraining overconfidence and overinvestment.

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“…The existence of different industries represents the existence of different corporate business philosophy and commitment to environmental protection. Heavy-pollution industry is a kind of high energy consumption, high-pollution industry, and fulfilling environmental responsibility is the key to improve environmental quality [86][87][88][89][90]. In order to study the impact of different industry types on government environmental subsidies and enterprise environmental performance, this paper divides the empirical samples into two types, conducts multiple regression analysis, and obtains different results.…”

Section: Industrial Difference Regression Analysismentioning

confidence: 99%

Empirical Study on the Impact of Government Environmental Subsidies on Environmental Performance of Heavily Polluting Enterprises Based on the Regulating Effect of Internal Control

Pei

2022

IJERPH

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At present, China’s economy is developing rapidly; however, at the same time, it is also bringing more and more serious environmental problems. Although many laws have been established in the country to limit pollution by enterprises—and enterprises are actively saving energy and reducing pollution—the situation is still not optimistic. In 2016, there were 35 cities across the country that exceeded the annual average air quality standard; these regions have been plagued by haze for a long time, which seriously threatens people’s health and sustainable social and economic development. Therefore, while pursuing economic benefits and realizing greater value, importance must be attached to environmental performance, especially for enterprises with serious pollution. Using the panel regression analysis method, based on the data of enterprises from 2010 to 2019, this paper empirically analyzes the effects of government environmental protection subsidies and internal control quality on the environmental performance of heavily polluting enterprises, and verifies the nonlinear critical effect of government subsidies and internal control on environmental performance. In addition, this paper also uses the intermediate effect model to verify the mechanism by which environmental subsidies impact the environmental performance of heavily polluting enterprises. Through the empirical analysis, the effects of environmental protection subsidies and internal control on the environmental performance of enterprises with serious pollution are obtained. In the process of environmental subsidy affecting the environmental performance of heavy-polluting enterprises, internal control plays a key intermediary role. In addition, environmental subsidies and internal controls have a certain impact on the environmental performance of heavily polluting enterprises. Through the empirical analysis, it is concluded that there are obvious differences between government subsidies and internal control on the environmental governance effects of heavily polluting enterprises in different regions and with different property rights. Among them, the environmental protection subsidies have the greatest impact on pollution degree in the central region, followed by the eastern region; in the western region, it is not obvious. Secondly, the incentive effect of government environmental subsidies on state-owned enterprises with serious environmental pollution is better than the environmental governance effect of non-state-owned enterprises.

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Internal control quality, equity pledge financing and investment efficiency

Cited by 6 publications

References 4 publications

Do controlling shareholders' equity pledges affect M&A investment? Evidence from listed companies in China

Do controlling shareholders' equity pledges affect M&A investment? Evidence from listed companies in China

Analysis of the influence of enterprise managers’ overconfidence on the overinvestment behavior of listed companies under the media reports

Empirical Study on the Impact of Government Environmental Subsidies on Environmental Performance of Heavily Polluting Enterprises Based on the Regulating Effect of Internal Control

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