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The empirical test on investment efficiency and influence of equity incentive in supply‐side structural reform: Based on the two‐tier stochastic frontier approach

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  • Changqian Xie
  • Lun Li

Abstract

This paper first empirically measured the investment efficiency and the influence of equity incentive on investment efficiency of listed companies in China within supply‐side structural reform based on the two‐tier stochastic frontier approach. The two‐tier stochastic frontier model was combined with the traditional Richardson Model and the data of empirical test were based on the nonfinancial companies, which is listed on Shanghai and Shenzhen A‐Share Markets in the period 2009 to 2015. On the aspect of investment efficiency, the different results were obtained from the overall empirical test, and further tests grouped by property rights, scales, and regions, and the corresponding reasons were analyzed. On the other aspect of influence of equity incentive on investment efficiency, the results showed that the implementation of equity incentive contributed to improve the overinvestment and underinvestment but the effects were not considerable in Chinese listed companies studied in this paper. Last, some suggestions on the problems found during the research were put forward.

Suggested Citation

  • Changqian Xie & Lun Li, 2018. "The empirical test on investment efficiency and influence of equity incentive in supply‐side structural reform: Based on the two‐tier stochastic frontier approach," Applied Stochastic Models in Business and Industry, John Wiley & Sons, vol. 34(5), pages 730-745, September.
    • Handle: RePEc:wly:apsmbi:v:34:y:2018:i:5:p:730-745
    DOI: 10.1002/asmb.2304
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    Cited by:

    1. Seog-Chan Oh & Jaemin Shin, 2021. "The Assessment of Car Making Plants with an Integrated Stochastic Frontier Analysis Model," Mathematics, MDPI, vol. 9(11), pages 1-21, June.
    2. Martinez-Cillero, Maria & Lawless, Martina & O'Toole, Conor, 2023. "Analysing SME investment, financing constraints and its determinants. A stochastic frontier approach," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 578-588.

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