Table 10

Effect of GPR on investment inefficiency, overinvestment, and underinvestment using Chen et al. (2011) method

Investment inefficiencyOverinvestmentUnderinvestment
VariablesModel 1Model 2Model 3Model 4Model 5Model 6
GPR0.4652***0.0925**0.0366***0.0176***0.0868***0.0112***
(0.000)(0.026)(0.002)(0.005)(0.003)(0.004)
TANG 0.0491*** 0.0778*** −0.0207***
 (0.010) (0.012) (0.002)
SIZE −0.0054*** −0.0157*** −0.0015***
 (0.001) (0.002) (0.000)
ROA 0.0857*** 0.0935 −0.0180***
 (0.027) (0.055) (0.004)
LEVE 0.0321*** 0.0503*** 0.0103***
 (0.004) (0.009) (0.001)
CASH 0.0340*** 0.0746*** −0.0138***
 (0.009) (0.017) (0.002)
SLACK 0.0014*** 0.0067*** 0.0012***
 (0.000) (0.002) (0.000)
Ln_OC −0.0007 −0.0058* −0.0003
 (0.001) (0.003) (0.000)
ROE 0.0012 −0.0016 −0.0031***
 (0.002) (0.010) (0.001)
CFO −0.0007* −0.0137** 0.0000
 (0.000) (0.006) (0.000)
Ln_Age −0.0057*** −0.0123*** −0.0008***
 (0.001) (0.002) (0.000)
TOBINSQ 0.0016 0.0083 −0.0010***
 (0.002) (0.006) (0.000)
GDP_GRO 0.0525** 0.0006* −0.0075***
 (0.016) (0.000) (0.000)
Intercept−2.3139***−0.7848**−0.0341***0.1529***−0.3899***0.2441***
(0.001)(0.259)(0.011)(0.034)(0.014)(0.004)
Industry FEYESYESYESYESYESYES
Year FEYESYESYESYESYESYES
Observations43,18240,89512,86012,13830,18328,754
Adj. R20.02800.08140.04980.12190.02220.0866

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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