IDEAS home Printed from https://ideas.repec.org/a/bla/ausecp/v61y2022i4p848-875.html

Financing liabilities and inefficient investment of listed companies: Based on the adjustment effect of different financial structures

Author

Listed:
  • Yuanyue Wang
  • Zhaohui Yu
  • Xiaojing Yi

Abstract

For national development, the investment efficiency of listed companies should be improved. We take samples of non‐financial and non‐real estate listed companies to investigate the mechanism of financial liabilities on the inefficient investment behaviour of listed companies from a financial structure perspective. Results of our empirical research indicate an inverted U‐shaped relationship between financing liabilities and investment efficiency, and that financing liabilities inhibit underinvestment and exacerbate overinvestment. Operating liabilities were found to have a restraining effect on underinvestment. A bank‐led financial structure is more effective in regulating financing liabilities and alleviating overinvestment, while a market‐led financial structure is more conducive to regulating financing liabilities and, thus, curbs underinvestment. Therefore, a company's financial structure should be adjusted in a timely manner, according to demand, the scale of financial liabilities should be adjusted to reduce inefficient investment, and operational liabilities can be appropriately expanded. Additionally, attention should be focused on the role of administrative intervention and financial development to improve the investment efficiency of listed companies and eventually realise stable development of the national economy.

Suggested Citation

  • Yuanyue Wang & Zhaohui Yu & Xiaojing Yi, 2022. "Financing liabilities and inefficient investment of listed companies: Based on the adjustment effect of different financial structures," Australian Economic Papers, Wiley Blackwell, vol. 61(4), pages 848-875, December.
    • Handle: RePEc:bla:ausecp:v:61:y:2022:i:4:p:848-875
    DOI: 10.1111/1467-8454.12240
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-8454.12240
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-8454.12240?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jinqing Zhang & Hui Chen & Yunbi An, 2020. "Does Expropriation of Large Shareholders Change Corporate Investment Behaviors? Evidence from Chinese Listed Companies," Global Economic Review, Taylor & Francis Journals, vol. 49(3), pages 223-250, July.
    2. Agnieszka Kozera & Aldona Standar & Łukasz Satoła, 2020. "Managing Rural Areas in the Context of the Growing Debt of Polish Local Government Units," Agriculture, MDPI, vol. 10(9), pages 1-25, August.
    3. You-hua Chen & Pu-yan Nie & Xiao-wei Wen, 2015. "Analysis of innovation based on financial structure," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 28(1), pages 631-640, January.
    4. Bolton, Patrick & Wang, Neng & Yang, Jinqiang, 2019. "Investment under uncertainty with financial constraints," Journal of Economic Theory, Elsevier, vol. 184(C).
    5. Francis de Véricourt & Denis Gromb, 2019. "Financing Capacity with Stealing and Shirking," Management Science, INFORMS, vol. 65(11), pages 5128-5141, November.
    6. Danso, Albert & Lartey, Theophilus & Amankwah-Amoah, Joseph & Adomako, Samuel & Lu, Qinye & Uddin, Moshfique, 2019. "Market sentiment and firm investment decision-making," International Review of Financial Analysis, Elsevier, vol. 66(C).
    7. Chang, Xin & Chen, Yangyang & Wang, Sarah Qian & Zhang, Kuo & Zhang, Wenrui, 2019. "Credit default swaps and corporate innovation," Journal of Financial Economics, Elsevier, vol. 134(2), pages 474-500.
    8. Mario Tirelli & Luca Spinesi, 2021. "R&D financing and growth," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(1), pages 24-47, January.
    9. Yue Cao & Yizhe Dong & Yu Lu & Diandian Ma, 2020. "Does Institutional Ownership Improve Firm Investment Efficiency?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(12), pages 2772-2792, September.
    10. Marc Arnold & Dirk Hackbarth & Tatjana Xenia Puhan, 2018. "Financing Asset Sales and Business Cycles [Does industry-wide distress affect defaulted firms? Evidence from creditor recoveries]," Review of Finance, European Finance Association, vol. 22(1), pages 243-277.
    11. Chen, Ting-Cih & Kim, Dong-Hyeon & Lin, Shu-Chin, 2021. "Nonlinearity in the effects of financial development and financial structure on unemployment," Economic Systems, Elsevier, vol. 45(1).
    12. Stefano Bonini & Vincenzo Capizzi, 2019. "The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and opportunities," Venture Capital, Taylor & Francis Journals, vol. 21(2-3), pages 137-175, July.
    13. Toshihiko Mukoyama & Latchezar Popov, 2020. "Industrialization and the evolution of enforcement institutions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(3), pages 745-788, April.
    14. Kuhl, Laura & Van Maanen, Kyla & Scyphers, Steven, 2020. "An analysis of UNFCCC-financed coastal adaptation projects: Assessing patterns of project design and contributions to adaptive capacity," World Development, Elsevier, vol. 127(C).
    15. Andrea Gamba & Alessio Saretto, 2020. "Growth Options and Credit Risk," Management Science, INFORMS, vol. 66(9), pages 4269-4291, September.
    16. Yue Cao & Yizhe Dong & Yu Lu & Diandian Ma, 2020. "Does Institutional Ownership Improve Firm Investment Efficiency?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(12), pages 2772-2792, September.
    17. Onur Boyabatlı & Tiecheng Leng & L. Beril Toktay, 2016. "The Impact of Budget Constraints on Flexible vs. Dedicated Technology Choice," Management Science, INFORMS, vol. 62(1), pages 225-244, January.
    18. Deng, Sijing & Fu, Ke & Xu, Jiayan & Zhu, Kaijie, 2021. "The supply chain effects of trade credit under uncertain demands," Omega, Elsevier, vol. 98(C).
    19. Li, Qing & Liu, Qigui & Ma, Shiguang & Tian, Gary Gang, 2019. "Loan financing and investment in princeling-backed firms," Pacific-Basin Finance Journal, Elsevier, vol. 56(C), pages 71-92.
    20. Kalim-Ullah Bhat & Shihua Chen & Yan Chen & Khalil Jebran, 2020. "Debt capacity, debt choice, and underinvestment problem: Evidence from China," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 33(1), pages 267-287, January.
    21. Yasin Alan & Vishal Gaur, 2018. "Operational Investment and Capital Structure Under Asset-Based Lending," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 637-654, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Zengfu & Yu, Zhijun & Yang, Zhihao & Ding, Zijia, 2025. "Specialization in Bank Lending and short-term debt for long-term use: Evidence from China," Finance Research Letters, Elsevier, vol. 75(C).
    2. Ding, Zijia & Liu, Qian & Che, Dexin, 2025. "Specialization in Bank lending and firm deleveraging: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 103(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qian, Cheng & Li, Zhaolin & Fu, Qi, 2026. "Managing inventory and financing decisions under ambiguity," Omega, Elsevier, vol. 140(C).
    2. Zhihao Wang & Kezhi Liao & Sisi Wang, 2024. "Institutional investor horizons, ownership structure and investment efficiency in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 739-782, March.
    3. Md. Rashidul Islam, 2024. "How to Achieve Financial Flexibility: the Role of Corporate Governance," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 6541-6577, June.
    4. Rayed Obaid Hammoud Alobaid & Ameen Qasem & Adel Ali Al-Qadasi, 2024. "Corporate Social Responsibility, Ownership Structure, and Firm Investment Efficiency: Evidence from the Saudi Stock Market," Sustainability, MDPI, vol. 16(15), pages 1-25, August.
    5. Xiao, Shengpeng & Wu, Kedong & Xiao, Xiao & Lin, Changqing, 2025. "How do data assets affect firm investment?," International Review of Financial Analysis, Elsevier, vol. 106(C).
    6. Fu, Chuanrui & Zou, Jingjing & Li, Li & Wang, Yanhui, 2025. "Institutional investors' site visits and ESG disclosure: The mediating role of environmental legitimacy pressure," Finance Research Letters, Elsevier, vol. 84(C).
    7. He Xiao, 2023. "Institutional investors' corporate site visits and corporate investment efficiency," International Review of Finance, International Review of Finance Ltd., vol. 23(2), pages 359-392, June.
    8. Xie, Xiaofeng & Shi, Xinyu & Gu, Jing & Xu, Xun, 2023. "Examining the Contagion Effect of Credit Risk in a Supply Chain under Trade Credit and Bank Loan Offering," Omega, Elsevier, vol. 115(C).
    9. Wang, Ziqi & Li, Rongrong & Kong, Qunxi, 2024. "Shanghai oil futures prices and firms' investment decisions: Evidence from Chinese manufacturing firms," Energy Economics, Elsevier, vol. 134(C).
    10. Li, Jianbin & Cheng, Wei & Song, Xiangrong & Zheng, Yuting, 2023. "The value of buyer financing with a minimum quantity commitment in pull supply chains," Omega, Elsevier, vol. 121(C).
    11. Sabahat Riaz & Mohamed Hisham Hanifa & Fauzi Zainir, 2021. "Does Foreign Institutional Equity Participation Instigate Sustainable Corporate Investment Efficiency? Evidence from Emerging Economies," Sustainability, MDPI, vol. 13(8), pages 1-17, April.
    12. Tran, Tam & Wilson, Craig & Yang, Fan, 2025. "Executive overconfidence, corporate investment, and institutional ownership: Evidence from Vietnam," Emerging Markets Review, Elsevier, vol. 68(C).
    13. Zou, Ying & Zhong, Zhuoming & Luo, Jia, 2021. "Ethnic diversity, investment efficiency, mediating roles of trust and agency cost," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 410-420.
    14. Tang, Kai & Cheng, Yuxiang, 2025. "CFO overseas experience and stock price crash risk," Global Finance Journal, Elsevier, vol. 66(C).
    15. Qilong Cao & Meng Ju & Jinglei Li & Changbao Zhong, 2022. "Managerial Myopia and Long-Term Investment: Evidence from China," Sustainability, MDPI, vol. 15(1), pages 1-20, December.
    16. Xu, Weidong & Huang, Wenxuan & Li, Donghui, 2024. "Climate risk and investment efficiency," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    17. Changling Sun & Ziang Lin & Marek Vochozka & Zuzana Vincúrová, 2022. "Digital transformation and corporate cash holdings in China’s A-share listed companies," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1081-1116, December.
    18. Ding Ning & Irfan-Ullah & Muhammad Ansar Majeed & Aurang Zeb, 2022. "Board diversity and financial statement comparability: evidence from China," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 743-801, December.
    19. Wang, Ziqi & Peng, Dan & Kong, Qunxi & Tan, Feifei, 2025. "Digital infrastructure and economic growth: Evidence from corporate investment efficiency," International Review of Economics & Finance, Elsevier, vol. 98(C).
    20. Zhao, Yang, 2024. "Retail shareholder activism and investment efficiency," International Review of Financial Analysis, Elsevier, vol. 93(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ausecp:v:61:y:2022:i:4:p:848-875. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0004-900X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.