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Religious influence, blockholder ownership, and corporate over-investment: evidence from Chinese Buddhism

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  • Xingqiang Du
  • Wei Jian
  • Quan Zeng
  • Yingying Chang

Abstract

This study extends recent literature about religious influence on corporate decisions by investigating the impact of Buddhism, the most influential religion, on corporate over-investment. Using a sample of 12,820 firm-year observations from the Chinese stock market for the period of 2001–2012, we document that Buddhism is significantly negatively associated with over-investment, suggesting that Buddhism as a set of social norms can reduce owner-manager agency conflicts, alleviate managers’ opportunistic behaviour and overconfidence, and thus mitigate over-investment. Moreover, blockholder ownership attenuates the negative association between Buddhism and over-investment. The above results are robust to a variety of sensitivity tests and are still valid after controlling for the endogeneity between Buddhism and over-investment.

Suggested Citation

  • Xingqiang Du & Wei Jian & Quan Zeng & Yingying Chang, 2016. "Religious influence, blockholder ownership, and corporate over-investment: evidence from Chinese Buddhism," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 4(2), pages 109-142, April.
    • Handle: RePEc:taf:rcjaxx:v:4:y:2016:i:2:p:109-142
    DOI: 10.1080/21697213.2016.1196059
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