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This study investigates the impact of political connection and information asymmetry on the investment efficiency of firms in China. This paper employs a panel data regression analysis on a dataset comprising 4307 observations for listed companies from 2008 to 2015. The results indicate that if taken alone, neither political connection nor information asymmetry affects firms’ investment efficiency. However, the interactive effect of both political connection and information asymmetry significantly reduces firms’ investment efficiency. The results of this study help investors understand the forces that lead the Chinese firms to deviate from optimal investment decisions.

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This paper examines the effect of the anti-corruption campaign on the investment behavior of Chinese politically connected firms between 2007and 2016. The results indicate that the campaign impacts on the investment expenditures and investment efficiency of Chinese listed firms. Compared with the precampaign period, all types of politically connected firms experience an obvious reduction in investment expenditures and SOEs controlled by local governments and Non-SOEs face enhanced investment efficiency after the campaign. Further analysis shows that it is mainly due to the mitigation of underinvestment for SOEs controlled by local governments and the alleviation of both over-investment and underinvestment for Non-SOEs.

In Taiwan, ownership structure is separated to differentiate between family businesses and non-family businesses. Moreover, the dynamic relationship between managerial ownership and corporate diversification is complicated. This study is attempted to examine, under different ownership structure, whether managerial ownership is associated with subsequent changes in diversification or diversification is associated with subsequent changes in ownership. This study used a sample of firms listed in Taiwan from 2002 to 2011; the Panel Data Regression with fixed effects model is utilized to find the relationship between managerial ownership and diversification. This result shows that in non-family businesses, managerial ownership (diversification) is negatively related to subsequent diversification (subsequent managerial ownership); in family businesses, managerial ownership (diversification) is positively related to subsequent diversification (subsequent managerial ownership). Therefore, investors should understand the business strategy that lead to changes among family business, managerial ownership and diversification in order to facilitate investment decisions.