Table 6 Effect of GPRT, GPRA, CGI and...

Table 6

Effect of GPRT, GPRA, CGI and its interaction 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 × CGI	−0.0021**	−0.0072***	−0.0007**
GPRT × CGI	(0.001)	(0.002)	(0.000)
GPRA × CGI				−0.0025***	−0.0053**	−0.0001***
GPRA × CGI				(0.001)	(0.003)	(0.000)
GPRT	0.0136*	0.4058***	0.0219***
GPRT	(0.007)	(0.123)	(0.003)
GPRA				0.0131***	0.0336**	0.1078***
GPRA				(0.004)	(0.013)	(0.022)
CGI	−0.0007***	−0.0014**	−0.0002**	−0.0009***	−0.0171*	−0.0003***
CGI	(0.000)	(0.001)	(0.000)	(0.000)	(0.009)	(0.000)
TANG	0.0327**	0.0610***	−0.0209***	0.0330**	0.0609***	−0.0212***
TANG	(0.015)	(0.021)	(0.003)	(0.015)	(0.021)	(0.003)
SIZE	−0.0056***	−0.0146***	−0.0018***	−0.0058***	−0.0151***	−0.0016***
SIZE	(0.002)	(0.004)	(0.000)	(0.002)	(0.004)	(0.000)
ROA	−0.0697	−0.1943*	−0.0342***	−0.0665	−0.1903*	−0.0399***
ROA	(0.070)	(0.115)	(0.008)	(0.069)	(0.115)	(0.008)
LEVE	0.0133	0.0182	0.0179***	0.0144	0.0219	0.0167***
LEVE	(0.015)	(0.027)	(0.003)	(0.015)	(0.027)	(0.003)
CASH	0.0569***	0.1785***	0.0025	0.0569***	0.1821***	0.0011
CASH	(0.017)	(0.034)	(0.005)	(0.017)	(0.034)	(0.005)
SLACK	0.0001	−0.0024	0.0019***	0.0002	−0.0024	0.0018***
SLACK	(0.001)	(0.003)	(0.000)	(0.001)	(0.003)	(0.000)
Ln_OC	−0.0040	−0.0102*	0.0011	−0.0044	−0.0109*	0.0015
Ln_OC	(0.003)	(0.006)	(0.001)	(0.003)	(0.006)	(0.001)
ROE	0.0026	−0.0457	−0.0007	0.0023	0.0093	−0.0005
ROE	(0.003)	(0.042)	(0.001)	(0.003)	(0.014)	(0.001)
CFO	−0.0509	−0.1134*	0.0030	−0.0505	−0.1116*	0.0047
CFO	(0.045)	(0.065)	(0.004)	(0.045)	(0.065)	(0.004)
Ln_Age	−0.0138***	−0.0304***	−0.0021**	−0.0142***	−0.0315***	−0.0019**
Ln_Age	(0.005)	(0.009)	(0.001)	(0.005)	(0.009)	(0.001)
TOBINSQ	0.0046	0.0127*	−0.0011***	0.0045	0.0124*	−0.0008**
TOBINSQ	(0.004)	(0.007)	(0.000)	(0.004)	(0.007)	(0.000)
GDP_GRO	0.0003	0.0001	0.0005***	0.0006*	0.0005	0.0006***
GDP_GRO	(0.000)	(0.001)	(0.000)	(0.000)	(0.001)	(0.000)
Intercept	0.2122***	0.4917***	−0.0182	0.2233***	0.4352***	0.1202***
Intercept	(0.070)	(0.128)	(0.014)	(0.058)	(0.128)	(0.014)
Industry FE	YES	YES	YES	YES	YES	YES
Year FE	YES	YES	YES	YES	YES	YES
Observations	6,464	2,113	4,351	6,464	2,113	4,351
Adj. R2	0.0572	0.1327	0.1405	0.0570	0.1314	0.1333

	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 × CGI	−0.0021**	−0.0072***	−0.0007**
GPRT × CGI	(0.001)	(0.002)	(0.000)
GPRA × CGI				−0.0025***	−0.0053**	−0.0001***
GPRA × CGI				(0.001)	(0.003)	(0.000)
GPRT	0.0136*	0.4058***	0.0219***
GPRT	(0.007)	(0.123)	(0.003)
GPRA				0.0131***	0.0336**	0.1078***
GPRA				(0.004)	(0.013)	(0.022)
CGI	−0.0007***	−0.0014**	−0.0002**	−0.0009***	−0.0171*	−0.0003***
CGI	(0.000)	(0.001)	(0.000)	(0.000)	(0.009)	(0.000)
TANG	0.0327**	0.0610***	−0.0209***	0.0330**	0.0609***	−0.0212***
TANG	(0.015)	(0.021)	(0.003)	(0.015)	(0.021)	(0.003)
SIZE	−0.0056***	−0.0146***	−0.0018***	−0.0058***	−0.0151***	−0.0016***
SIZE	(0.002)	(0.004)	(0.000)	(0.002)	(0.004)	(0.000)
ROA	−0.0697	−0.1943*	−0.0342***	−0.0665	−0.1903*	−0.0399***
ROA	(0.070)	(0.115)	(0.008)	(0.069)	(0.115)	(0.008)
LEVE	0.0133	0.0182	0.0179***	0.0144	0.0219	0.0167***
LEVE	(0.015)	(0.027)	(0.003)	(0.015)	(0.027)	(0.003)
CASH	0.0569***	0.1785***	0.0025	0.0569***	0.1821***	0.0011
CASH	(0.017)	(0.034)	(0.005)	(0.017)	(0.034)	(0.005)
SLACK	0.0001	−0.0024	0.0019***	0.0002	−0.0024	0.0018***
SLACK	(0.001)	(0.003)	(0.000)	(0.001)	(0.003)	(0.000)
Ln_OC	−0.0040	−0.0102*	0.0011	−0.0044	−0.0109*	0.0015
Ln_OC	(0.003)	(0.006)	(0.001)	(0.003)	(0.006)	(0.001)
ROE	0.0026	−0.0457	−0.0007	0.0023	0.0093	−0.0005
ROE	(0.003)	(0.042)	(0.001)	(0.003)	(0.014)	(0.001)
CFO	−0.0509	−0.1134*	0.0030	−0.0505	−0.1116*	0.0047
CFO	(0.045)	(0.065)	(0.004)	(0.045)	(0.065)	(0.004)
Ln_Age	−0.0138***	−0.0304***	−0.0021**	−0.0142***	−0.0315***	−0.0019**
Ln_Age	(0.005)	(0.009)	(0.001)	(0.005)	(0.009)	(0.001)
TOBINSQ	0.0046	0.0127*	−0.0011***	0.0045	0.0124*	−0.0008**
TOBINSQ	(0.004)	(0.007)	(0.000)	(0.004)	(0.007)	(0.000)
GDP_GRO	0.0003	0.0001	0.0005***	0.0006*	0.0005	0.0006***
GDP_GRO	(0.000)	(0.001)	(0.000)	(0.000)	(0.001)	(0.000)
Intercept	0.2122***	0.4917***	−0.0182	0.2233***	0.4352***	0.1202***
Intercept	(0.070)	(0.128)	(0.014)	(0.058)	(0.128)	(0.014)
Industry FE	YES	YES	YES	YES	YES	YES
Year FE	YES	YES	YES	YES	YES	YES
Observations	6,464	2,113	4,351	6,464	2,113	4,351
Adj. R2	0.0572	0.1327	0.1405	0.0570	0.1314	0.1333

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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