IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v44y2023i5p2540-2567.html
   My bibliography  Save this article

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

Author

Listed:
  • Xu Zhao
  • Qi‐an Chen
  • Haitao Zhang

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.

Suggested Citation

  • Xu Zhao & Qi‐an Chen & Haitao Zhang, 2023. "Firm investment and financial autonomy: A transaction cost economics and firm lifecycle approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(5), pages 2540-2567, July.
  • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:5:p:2540-2567
    DOI: 10.1002/mde.3832
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.3832
    Download Restriction: no

    File URL: https://libkey.io/10.1002/mde.3832?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
    ---><---

    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:wly:mgtdec:v:44:y:2023:i:5:p:2540-2567. 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.

    We have no bibliographic references for this item. You can help adding them by using 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://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    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.