Firm investment and financial autonomy: A transaction cost economics and firm lifecycle approach

Xu Zhao, Qi‐an Chen and Haitao Zhang

Managerial and Decision Economics, 2023, vol. 44, issue 5, 2540-2567

Abstract: This study examines how firm's investments relate to financial autonomy across different stages of lifecycle. With 1367 Chinese listed companies from 1990 to 2018, the results indicate that firms with high (low) financial autonomy tend to over‐invest (under‐invest). Accordingly, financially autonomous firms have lower valuation. While corporate governance mitigates both over‐ and under‐investment over time in China, such an effect becomes statistically insignificant after considering different magnitudes of financial autonomy. The Chinese policy makers should consider designing more solid corporate governance to control the opportunism of managers who are more financially independent.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/mde.3832

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:44:y:2023:i:5:p:2540-2567

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().