The disappearing of firm investment efficiency: From the perspective of the discrepancy between production and consumption prices

Ao Li, Sicen Chen, Qihao Zhang and Chengyi Liu

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: This paper investigates the impact of the widening PPI-CPI price scissors on firm investment efficiency, based on the data from listed companies in the energy sector during 2010–2021. The results show that the widening of the PPI-CPI price scissors will inhibit the investment efficiency of enterprises, mainly by triggering overinvestment. Besides, enterprises with low valuation and private enterprises are more significantly affected by the price scissors. Inventory control and adjustment are the main impact mechanism in the above effects. This paper provides an insight for enterprises’ managers to understand the consequences and mechanisms of PPI-CPI price scissors.

Keywords: PPI-CPI price scissors; Energy enterprises; Investment efficiency; Inventory change (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323009157

DOI: 10.1016/j.frl.2023.104543

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