Table 3

Baseline regression results of OK on corporate investment inefficiency

VariablesInvestment inefficiency (1)Investment inefficiency (2)Investment inefficiency (3)Investment inefficiency (4)
Intercept−0.004***0.013−0.003***0.018**
(0.001)(0.008)(0.000)(0.008)
OKTA0.017***0.021***  
(0.003)(0.004)  
OKTC  0.007***0.009***
  (0.001)(0.002)
Size −0.001** −0.001**
 (0.000) (0.000)
ROA −0.000 −0.000
 (0.000) (0.000)
Slack 0.010*** 0.010***
 (0.003) (0.003)
Tangibility 0.008*** 0.008***
 (0.002) (0.002)
Firm age −0.001** −0.002**
 (0.001) (0.001)
Leverage 0.000 −0.000
 (0.000) (0.000)
Tobin’s Q −0.000*** −0.000***
 (0.000) (0.000)
Loss −0.001 −0.001
 (0.001) (0.001)
Firm FEYesYesYesYes
Year FEYesYesYesYes
R2 (%)42.0251.7641.3151.26
F-statistics (Wald)24.0725.6525.0727.86
p-value(0.000)(0.000)(0.000)(0.000)
Observations5,1604,9095,1504,902

Note(s): The table presents the results of baseline regressions that examine the impact of OK on investment inefficiency. The dependent variable is investment inefficiency, which captures deviation from optimal investment based on the residuals from the investment model. The main independent variable is OK, measured by either OKTA, the ratio of OK to total assets, or OKTC, which is the ratio of OK to total capital and is our independent variable. Control variables include size, ROA, slack, tangibility, firm age, leverage, Tobin’s Q, and Loss. All variables are as defined in  Appendix 1. Figures in parentheses are standard errors that are clustered at the firm level for heteroscedasticity. (***) (**) (*) significance at the (1%) (5%) (10%) levels

Source(s): Authors’ own work

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