A balancing act: Managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market
利用1998-2014年中国上市公司面板数据，研究发现现金流低于最优水平的企业因融资约束而投资不足，高于最优水平的企业因代理成本而过度投资，并分析了异常投资对自由现金流的敏感度如何随约束和成本变化。
Using a large panel of Chinese listed firms over the period 1998–2014, we document strong evidence of investment inefficiency, which we explain through a combination of financing constraints and agency problems. Specifically, we argue that firms with cash flow below (above) their optimal level tend to under- (over-)invest as a consequence of financial constraints (agency costs). Furthermore, focusing on under-investing firms, we highlight that the sensitivities of abnormal investment to free cash flow rise with traditionally used measures of financing constraints, while for over-investing firms, the sensitivities increase with a wide range of firm-specific measures of agency costs.