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Remedial role of financial development in corporate investment amid financing constraints and agency costs

Labour, Employment and Work in New Zealand

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Field Value
 
Title Remedial role of financial development in corporate investment amid financing constraints and agency costs
 
Creator Khan, Muhammad Kaleem
He, Ying
Kaleem, Ahmad
Akram, Umair
Hussain, Zahid
 
Description The study investigates the role of financial development in boosting the investment efficiency of firms’ investments in China. Using a large sample of firm-level financial data and country level economic data over the period 2004–2015, present study creates a link between financial and real economy. Firms are priori classified into under- or over-invested and effect of financial development is analyzed individually on each classification by using panel data estimations. The research concludes that firms suffering from under- (over-) investment problem due to financing constraints (agency problem), are more likely to increase (decrease) their investment` in the response of underlying financial development in the economy. This study has demonstrated a novel approach by concurrently incorporating the monitoring and financing issues that disturb the optimal level of investments. Moreover, the findings give strong implications by suggesting and empirically proving the remedy that has the potential to balance the investment distortions by rectifying monitoring and financing deficiencies.
 
Publisher VGTU Press Technika
 
Date 2018-05-04
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://journals.vgtu.lt/index.php/JBEM/article/view/1598
10.3846/16111699.2017.1422797
 
Source Journal of Business Economics and Management; Vol 19 No 1 (2018); 176-191
2029-4433
1611-1699
 
Language eng
 
Relation https://journals.vgtu.lt/index.php/JBEM/article/view/1598/1252
 
Rights Copyright (c) 2018 Journal of Business Economics and Management
http://creativecommons.org/licenses/by/4.0