Debt structure, economic stimulus and firm investment efficiency

Abstract

We demonstrate that, in China, firm investment efficiency gains are associated with the use of short‐term debt, especially its trade credit component. During the 2009–2010 economic stimulus plan, such effects were heightened and generally remained persistent in the 2011–2013 poststimulus period. Our findings support the view that the rollover pressure of short‐maturity debt and the information advantage of supply chain financing are both effective mechanisms for enhancing firm governance in an environment more susceptible to financial market incompleteness. Consequently, the enormous credit boost during the stimulus plan was more efficiently invested when channelled through firms' supply chains.

Optimizing retail prosperity: Strategic working capital management and its impact on the global economy

“…To guarantee that operating expenses are met, and short-term debts are paid on schedule, working capital management focuses on maintaining a balance between a company's short-term current assets and liabilities (Han et al, 2023). The goal of this management is to eventually increase the company's value by preserving a balance between profitability and liquidity (Han et al, 2023). Working capital management is an essential component of long-term success for businesses because it helps them prevent bankruptcy and lower profitability (Bhattacheryay, 2023).…”

News sentiment and investment efficiency: Evidence from China

“…Also, the study fills the research gap regarding the association between sentiment in the media and two sources of investment inefficiency (i.e., overinvestment and underinvestment). Our work is associated with existing studies that are based on firm-level data to provide evidence of Chinese firms' investment efficiency (Firth et al, 2008;Han et al, 2023;Liu & Tian, 2021). For instance, Jiang et al (2018) find the governance role of multiple major shareholders (referred to as MLS) in firms' investment decision-making, as MLS can distort the company's investment inefficiency by alleviating the company's agency cost and information asymmetry.…”