ETFs, financing constraints and corporate investment efficiency: An analysis of the regulatory effect based on equity incentive policies

Qi Liu

Finance Research Letters, 2025, vol. 73, issue C

Abstract: The diversity of ETF products and their trading adaptability provide an effective means to optimize investment portfolios and enhance capital allocation efficiency, thereby better promoting corporate investment efficiency. This paper conducts an empirical analysis based on data from listed companies between 2008 and 2022, leading to the following conclusions: ETFs have a positive effect on improving corporate investment efficiency. They help alleviate financing constraints, which in turn boosts investment efficiency. The impact of ETFs is stronger on companies in the eastern regions, and the effect is greater on non-state-owned enterprises than on state-owned ones. Moreover, when equity incentive policies are well-implemented, the positive influence of ETFs on investment efficiency is further amplified.

Keywords: ETF products; Corporate investment efficiency; Financing constraints; Equity incentives (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s154461232401657x

DOI: 10.1016/j.frl.2024.106628

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