IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v58y2023ipcs1544612323009157.html
   My bibliography  Save this article

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

Author

Listed:
  • Li, Ao
  • Chen, Sicen
  • Zhang, Qihao
  • Liu, Chengyi

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.

Suggested Citation

  • Li, Ao & Chen, Sicen & Zhang, Qihao & Liu, Chengyi, 2023. "The disappearing of firm investment efficiency: From the perspective of the discrepancy between production and consumption prices," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323009157
    DOI: 10.1016/j.frl.2023.104543
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323009157
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104543?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Biddle, Gary C. & Hilary, Gilles & Verdi, Rodrigo S., 2009. "How does financial reporting quality relate to investment efficiency?," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 112-131, December.
    2. Aviv Nevo & Adam M. Rosen, 2012. "Identification With Imperfect Instruments," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 659-671, August.
    3. Chen, Shimin & Sun, Zheng & Tang, Song & Wu, Donghui, 2011. "Government intervention and investment efficiency: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 17(2), pages 259-271, April.
    4. Zhou, Guangyou & Sun, Yongkun & Luo, Sumei & Liao, Jiayi, 2021. "Corporate social responsibility and bank financial performance in China: The moderating role of green credit," Energy Economics, Elsevier, vol. 97(C).
    5. Hu, Jinshuai & Jiang, Haiyan & Holmes, Mark, 2019. "Government subsidies and corporate investment efficiency: Evidence from China," Emerging Markets Review, Elsevier, vol. 41(C).
    6. Liu, Haiyue & Jiang, Jie & Xue, Rui & Meng, Xiaofan & Hu, Shiyang, 2022. "Corporate environmental governance scheme and investment efficiency over the course of COVID-19," Finance Research Letters, Elsevier, vol. 47(PB).
    7. Mohammed Benlemlih & Mohammad Bitar, 2018. "Corporate Social Responsibility and Investment Efficiency," Journal of Business Ethics, Springer, vol. 148(3), pages 647-671, March.
    8. Stephie Tsai, Hsin-Ju & Wu, Yuliang & Xu, Bin, 2021. "Does capital market drive corporate investment efficiency? Evidence from equity lending supply," Journal of Corporate Finance, Elsevier, vol. 69(C).
    9. Timothy G. Conley & Christian B. Hansen & Peter E. Rossi, 2012. "Plausibly Exogenous," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 260-272, February.
    10. Ling, Xiaoting & Wu, Wuqing, 2022. "Leverage and investment efficiency: Evidence from China's deleveraging policy," Finance Research Letters, Elsevier, vol. 47(PA).
    11. Giones, Ferran & Brem, Alexander & Berger, Andreas, 2019. "Strategic decisions in turbulent times: Lessons from the energy industry," Business Horizons, Elsevier, vol. 62(2), pages 215-225.
    12. Lin, Yu-En & Li, Yi-Wen & Cheng, Teng Yuan & Lam, Keith, 2021. "Corporate social responsibility and investment efficiency: Does business strategy matter?," International Review of Financial Analysis, Elsevier, vol. 73(C).
    13. Xiao, Jihong & Zhou, Min & Wen, Fengming & Wen, Fenghua, 2018. "Asymmetric impacts of oil price uncertainty on Chinese stock returns under different market conditions: Evidence from oil volatility index," Energy Economics, Elsevier, vol. 74(C), pages 777-786.
    14. Huseyin Gulen & Mihai Ion, 2016. "Editor's Choice Policy Uncertainty and Corporate Investment," The Review of Financial Studies, Society for Financial Studies, vol. 29(3), pages 523-564.
    Full references (including those not matched with items on IDEAS)

    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. Yu, Lianchao & Sha, Haobin & Liu, Qiang & Yan, Guowan, 2024. "Environmental judicial independence and corporate investment efficiency: Evidence from a quasi-natural experiment in China," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    2. Zhao, Lingxiao & Liu, Xiao & Tang, Yunpeng & Zhang, Wenjing, 2024. "Functional subsidies, selective subsidies and corporate investment efficiency: Evidence from China," Emerging Markets Review, Elsevier, vol. 61(C).
    3. Xu, Chang & Jin, Long, 2024. "Effects of government digitalization on firm investment efficiency: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 819-834.
    4. Cao, Ning & McGuinness, Paul B. & Xi, Chao, 2024. "Majority-of-the-minority shareholder votes and investment efficiency," Journal of Corporate Finance, Elsevier, vol. 89(C).
    5. Iman Harymawan & Mohammad Nasih & Dian Agustia & Fajar Kristanto Gautama Putra & Hadrian Geri Djajadikerta, 2022. "Investment efficiency and environmental, social, and governance reporting: Perspective from corporate integration management," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1186-1202, September.
    6. Teklay, Belaynesh & Yu, Wei & Zhu, Keying, 2024. "The effect of superstitious beliefs on corporate investment efficiency: evidence from China," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1434-1447.
    7. Akron, Sagi & Demir, Ender & Díez-Esteban, José María & García-Gómez, Conrado Diego, 2022. "How does uncertainty affect corporate investment inefficiency? Evidence from Europe," Research in International Business and Finance, Elsevier, vol. 62(C).
    8. Wang, Maochuan & Yan, Youliang, 2023. "Employee treatment and corporate investment efficiency: Evidence from China," Economic Modelling, Elsevier, vol. 128(C).
    9. Ala'a Adden Awni Abuhommous, 2025. "Does the firm's life cycle matter in the relationship between short‐term debt and investment efficiency?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 1429-1449, April.
    10. Mengqin Zhang & Yi He & Surui Zhang & Xiang Zhang & Stavros Sindakis & Saloome Showkat, 2024. "Stock Liquidity and Investment Efficiency: Evidence from the New Regulation of Insider Selling in China," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8563-8587, June.
    11. Tao Chen & Shuwen Pi & Qing Sophie Wang, 2025. "Artificial Intelligence and Corporate Investment Efficiency: Evidence from Chinese Listed Companies," Working Papers in Economics 25/05, University of Canterbury, Department of Economics and Finance.
    12. Yang, Baochen & An, Haokai & Song, Xinyu, 2024. "Oil price uncertainty and corporate inefficient investment: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 70(C).
    13. Zhe Li & Oksana Pryshchepa & Bo Wang, 2023. "Financial experts on the top management team: Do they reduce investment inefficiency?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(1-2), pages 198-235, January.
    14. 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.
    15. 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.
    16. Zhao, Lei & Li, Na & Wu, Yanjun, 2023. "Institutional investors' site visits, information asymmetry, and investment efficiency," International Review of Financial Analysis, Elsevier, vol. 88(C).
    17. Rehana Anwar & Jaleel A. Malik, 2020. "When Does Corporate Social Responsibility Disclosure Affect Investment Efficiency? A New Answer to an Old Question," SAGE Open, , vol. 10(2), pages 21582440209, June.
    18. Lai, Xiaobing & Quan, Lei & Guo, Chong & Gao, Xing, 2025. "Exploring the digital era: Has digital technology innovation reshaped investment efficiency in Chinese enterprises?," Research in International Business and Finance, Elsevier, vol. 75(C).
    19. Ijaz Ur Rehman & Faisal Shahzad & Khawaja Fawad Latif & Noman Nawab & Abdul Rashid & Shabir Hyder, 2021. "Does corporate social responsibility mediate the influence of national culture on investment inefficiency? Firm‐level evidence from Asia Pacific," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3484-3503, July.
    20. Yanchao Feng & Rongbing Huang & Yidong Chen & Guoshuo Sui, 2024. "Assessing the moderating effect of environmental regulation on the process of media reports affecting enterprise investment inefficiency in China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-16, December.

    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:eee:finlet:v:58:y:2023:i:pc:s1544612323009157. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    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.