Table 4 Effect of GPRT and GPRA on...

Table 4

Effect of GPRT and GPRA on investment inefficiency, overinvestment, and underinvestment

	Panel A (GPRT)			Panel B (GPRA)
	Investment inefficiency	Overinvestment	Underinvestment	Investment inefficiency	Overinvestment	Underinvestment
Variables	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
GPRT	1.1694***	0.0347***	0.0048***
GPRT	(0.272)	(0.007)	(0.001)
GPRA				0.0463***	0.0121***	0.0129***
GPRA				(0.011)	(0.003)	(0.002)
TANG	0.0498***	0.0806***	−0.0188***	0.0498***	0.0806***	−0.0181***
TANG	(0.010)	(0.012)	(0.001)	(0.010)	(0.012)	(0.002)
SIZE	−0.0058***	−0.0160***	−0.0019***	−0.0059***	−0.0161***	−0.0024***
SIZE	(0.001)	(0.002)	(0.000)	(0.001)	(0.002)	(0.000)
ROA	0.0785***	0.0897	−0.0256***	0.0784***	0.0895	−0.0276***
ROA	(0.027)	(0.056)	(0.003)	(0.027)	(0.056)	(0.004)
LEVE	0.0336***	0.0513***	0.0128***	0.0334***	0.0511***	0.0131***
LEVE	(0.004)	(0.010)	(0.001)	(0.004)	(0.010)	(0.001)
CASH	0.0342***	0.0752***	−0.0031	0.0340***	0.0753***	−0.0045**
CASH	(0.009)	(0.016)	(0.002)	(0.009)	(0.016)	(0.002)
SLACK	0.0016***	0.0072***	0.0013***	0.0017***	0.0070***	0.0014***
SLACK	(0.000)	(0.002)	(0.000)	(0.000)	(0.002)	(0.000)
Ln_OC	−0.0001	−0.0053*	0.0008***	−0.0001	−0.0050*	0.0009**
Ln_OC	(0.001)	(0.003)	(0.000)	(0.001)	(0.003)	(0.000)
ROE	0.0001	−0.0012	−0.0027***	0.0001	−0.0011	−0.0030***
ROE	(0.003)	(0.011)	(0.001)	(0.003)	(0.011)	(0.001)
CFO	−0.0003	−0.0146	0.0003	−0.0003	−0.0145	0.0003
CFO	(0.000)	(0.010)	(0.000)	(0.000)	(0.010)	(0.000)
Ln_Age	−0.0058***	−0.0121***	−0.0008***	−0.0057***	−0.0120***	−0.0012***
Ln_Age	(0.001)	(0.002)	(0.000)	(0.001)	(0.002)	(0.000)
TOBINSQ	0.0014	0.0088	−0.0015***	0.0013	0.0087	−0.0015***
TOBINSQ	(0.002)	(0.006)	(0.000)	(0.002)	(0.006)	(0.000)
GDP_GRO	0.4404***	−0.0000	0.0002***	0.0454**	0.0001	0.0005***
GDP_GRO	(0.104)	(0.000)	(0.000)	(0.012)	(0.000)	(0.000)
Intercept	−9.3451***	0.0696	0.0508***	−0.4975**	0.1821***	0.1005***
Intercept	(2.203)	(0.042)	(0.005)	(0.146)	(0.027)	(0.007)
Industry FE	YES	YES	YES	YES	YES	YES
Year FE	YES	YES	YES	YES	YES	YES
Observations	40,895	12,297	28,595	40,895	12,297	28,598
Adj. R2	0.0830	0.1216	0.1170	0.0831	0.1223	0.1192

	Panel A (GPRT)			Panel B (GPRA)
	Investment inefficiency	Overinvestment	Underinvestment	Investment inefficiency	Overinvestment	Underinvestment
Variables	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
GPRT	1.1694***	0.0347***	0.0048***
GPRT	(0.272)	(0.007)	(0.001)
GPRA				0.0463***	0.0121***	0.0129***
GPRA				(0.011)	(0.003)	(0.002)
TANG	0.0498***	0.0806***	−0.0188***	0.0498***	0.0806***	−0.0181***
TANG	(0.010)	(0.012)	(0.001)	(0.010)	(0.012)	(0.002)
SIZE	−0.0058***	−0.0160***	−0.0019***	−0.0059***	−0.0161***	−0.0024***
SIZE	(0.001)	(0.002)	(0.000)	(0.001)	(0.002)	(0.000)
ROA	0.0785***	0.0897	−0.0256***	0.0784***	0.0895	−0.0276***
ROA	(0.027)	(0.056)	(0.003)	(0.027)	(0.056)	(0.004)
LEVE	0.0336***	0.0513***	0.0128***	0.0334***	0.0511***	0.0131***
LEVE	(0.004)	(0.010)	(0.001)	(0.004)	(0.010)	(0.001)
CASH	0.0342***	0.0752***	−0.0031	0.0340***	0.0753***	−0.0045**
CASH	(0.009)	(0.016)	(0.002)	(0.009)	(0.016)	(0.002)
SLACK	0.0016***	0.0072***	0.0013***	0.0017***	0.0070***	0.0014***
SLACK	(0.000)	(0.002)	(0.000)	(0.000)	(0.002)	(0.000)
Ln_OC	−0.0001	−0.0053*	0.0008***	−0.0001	−0.0050*	0.0009**
Ln_OC	(0.001)	(0.003)	(0.000)	(0.001)	(0.003)	(0.000)
ROE	0.0001	−0.0012	−0.0027***	0.0001	−0.0011	−0.0030***
ROE	(0.003)	(0.011)	(0.001)	(0.003)	(0.011)	(0.001)
CFO	−0.0003	−0.0146	0.0003	−0.0003	−0.0145	0.0003
CFO	(0.000)	(0.010)	(0.000)	(0.000)	(0.010)	(0.000)
Ln_Age	−0.0058***	−0.0121***	−0.0008***	−0.0057***	−0.0120***	−0.0012***
Ln_Age	(0.001)	(0.002)	(0.000)	(0.001)	(0.002)	(0.000)
TOBINSQ	0.0014	0.0088	−0.0015***	0.0013	0.0087	−0.0015***
TOBINSQ	(0.002)	(0.006)	(0.000)	(0.002)	(0.006)	(0.000)
GDP_GRO	0.4404***	−0.0000	0.0002***	0.0454**	0.0001	0.0005***
GDP_GRO	(0.104)	(0.000)	(0.000)	(0.012)	(0.000)	(0.000)
Intercept	−9.3451***	0.0696	0.0508***	−0.4975**	0.1821***	0.1005***
Intercept	(2.203)	(0.042)	(0.005)	(0.146)	(0.027)	(0.007)
Industry FE	YES	YES	YES	YES	YES	YES
Year FE	YES	YES	YES	YES	YES	YES
Observations	40,895	12,297	28,595	40,895	12,297	28,598
Adj. R2	0.0830	0.1216	0.1170	0.0831	0.1223	0.1192

Note(s): All models employing pooled panel OLS estimation. Robust standard errors in brackets are clustered by firm and year to address serial correlation and heteroskedasticity. The measurement of the variables is in Appendix Table A1. *, **, and *** indicate significance levels of 10%, 5%, and 1%, respectively

Source(s): Authors own work

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