Key Determinants of Corporate Investment Efficiency

Sila Ninin Wisnantiasri; Yeni Widiastuti; Dwirini

doi:10.55927/ijba.v5i2.14219

Authors

Sila Ninin Wisnantiasri Universitas Terbuka
Yeni Widiastuti Universitas Terbuka
Dwirini Universitas Terbuka

DOI:

https://doi.org/10.55927/ijba.v5i2.14219

Keywords:

Investment Efficiency, Corporate Governance, Financial Reporting Quality, Systematic Literature Review, Kitchenham Method

Abstract

The efficient allocation of capital to value-enhancing investment is a crucial concern of accounting finance practices. Over the past decades, a growing body of research has studied the factors of investment efficiency, yet a comprehensive synthesis remains limited. This study employs the Kitchenham systematic literature review methodology and citation analysis. By analyzing 65 peer-reviewed articles from the Scopus database that addressed investment efficiency, we identify eight major determinants depending on the method and contextual setting employed: financial reporting and accounting quality, corporate governance and CSR, government intervention and policy, ownership structure, industry and sector-specific, international and emerging markets, and methodological approaches and theoretical advancements. It contributes a more comprehensive understanding of the mechanism driving investment efficiency and optimizing capital allocation.

Downloads

Download data is not yet available.

References

Ardianto, H. P., Harymawan, I., Paramitasari, Y. I., & Nasih, M. (2020). Financial Reporting Quality and Investment Efficiency: Evidence from Indonesian Stock Market. Economics and Finance in Indonesia, 66(2), 112. https://doi.org/10.47291/efi.v66i2.702

Bai, Y., & Wu, M. (2024). Tax reform and investment efficiency: evidence from China’s replacement of business tax with VAT. International Journal of Emerging Markets, 19(3), 775–797.

Barth, M. E., Cahan, S. F., Chen, L., & Venter, E. R. (2017). The economic consequences associated with integrated report quality: Capital market and real effects. Accounting, Organizations and Society, 62(2017), 43–64. https://doi.org/10.1016/j.aos.2017.08.005

Benlemlih, M., & Bitar, M. (2018). Corporate Social Responsibility and Investment Efficiency. Journal of Business Ethics, 148(3), 647–671. https://doi.org/10.1007/s10551-016-3020-2

Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics, 48(2–3), 112–131. https://doi.org/10.1016/j.jacceco.2009.09.001

Bushee, B. J., Core, J. E., Guay, W., & Hamm, S. J. W. (2010). The role of the business press as an information intermediary. Journal of Accounting Research, 48(1), 1–19. https://doi.org/10.1111/j.1475-679X.2009.00357.x

Cao, Y., Dong, Y., Lu, Y., & Ma, D. (2020). Does Institutional Ownership Improve Firm Investment Efficiency? Emerging Markets Finance and Trade, 56(12), 2772–2792. https://doi.org/10.1080/1540496X.2018.1486705

Chen, C., Young, D., & Zhuang, Z. (2013). Externalities of mandatory IFRS adoption: Evidence from cross-border spillover effects of financial information on investment efficiency. Accounting Review, 88(3), 881–914. https://doi.org/10.2308/accr-50384

Chen, F., Hope, O. K., Li, Q., & Wang, X. (2011). Financial reporting quality and investment efficiency of private firms in emerging markets. Accounting Review, 86(4), 1255–1288. https://doi.org/10.2308/accr-10040

Chen, R., El Ghoul, S., Guedhami, O., & Wang, H. (2017). Do state and foreign ownership affect investment efficiency? Evidence from privatizations. Journal of Corporate Finance, 42, 408–421. https://doi.org/10.1016/j.jcorpfin.2014.09.001

Chen, S., Sun, Z., Tang, S., & Wu, D. (2011). Government intervention and investment efficiency: Evidence from China. Journal of Corporate Finance, 17(2), 259–271. https://doi.org/10.1016/j.jcorpfin.2010.08.004

Chen, T., Xie, L., & Zhang, Y. (2017). How does analysts’ forecast quality relate to corporate investment efficiency? Journal of Corporate Finance, 43, 217–240. https://doi.org/10.1016/j.jcorpfin.2016.12.010

Cheynel, E. (2013). A theory of voluntary disclosure and cost of capital. Review of Accounting Studies, 18(4), 987–1020. https://doi.org/10.1007/s11142-013-9223-1

Cook, K. A., Romi, A. M., Sánchez, D., & Sánchez, J. M. (2019). The influence of corporate social responsibility on investment efficiency and innovation. Journal of Business Finance and Accounting, 46(3–4), 494–537. https://doi.org/10.1111/jbfa.12360

Drake, M. S., Guest, N. M., & Twedt, B. J. (2014). The media and mispricing: The role of the business press in the pricing of accounting information. Accounting Review, 89(5), 1673–1701. https://doi.org/10.2308/accr-50757

Farooq, U., Tabash, M. I., Al-Naimi, A. A., & Drachal, K. (2022). Corporate Investment Decision: A Review of Literature. Journal of Risk and Financial Management, 15(12). https://doi.org/10.3390/jrfm15120611

Gao, X., Xu, W., Li, D., & Xing, L. (2021). Media coverage and investment efficiency. Journal of Empirical Finance, 63(October 2020), 270–293. https://doi.org/10.1016/j.jempfin.2021.07.002

Han, C., Thomas, S. R., Yang, M., Ieromonachou, P., & Zhang, H. (2017). Evaluating R&D investment efficiency in China’s high-tech industry. Journal of High Technology Management Research, 28(1), 93–109. https://doi.org/10.1016/j.hitech.2017.04.007

Hu, J., Kong, M., & Wang, K. (2022). The Influencial Factors and Economic Consequences of Corporate Investment Efficiency: A Literature Review.

Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022), 211, 2389–2394.

Huang, B., Yang, E., & Zhang, Y. (2023). Board surname sharing and investment efficiency: Evidence from Chinese state-owned enterprises. Corporate Governance: An International Review, 31(4), 597–624.

Huang, C.-Y., Yuan, S.-F., Quang, C. D., & Nguyen, A. T. T. (2022). What Factors Affect Investment Efficiency? A Co-citation Analysis. Universal Journal of Accounting and Finance, 10(6), 913–924. https://doi.org/10.13189/ujaf.2022.100601

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency cost and ownership structure. Journal of Financial Economic, 3, 305–360. https://doi.org/10.1177/0018726718812602

Kanodia, C., & Sapra, H. (2016). A Real Effects Perspective to Accounting Measurement and Disclosure: Implications and Insights for Future Research. Journal of Accounting Research, 54(2), 623–676. https://doi.org/10.1111/1475-679X.12109

Kitchenham, B., & Brereton, P. (2013). A systematic review of systematic review process research in software engineering. Information and Software Technology, 55(12), 2049–2075. https://doi.org/10.1016/j.infsof.2013.07.010

Li, L., Li, F., & Liu, F. (2015). Influencing Factors of Firms’ Investment Efficiency. International Journal of Sociology Study, 3(1), 58–60. https://doi.org/10.12783/ijss.2015.03.012

Liu, X., Si, F., Xie, C., & Xie, L. (2024). Minority state ownership and firm performance: Evidence from the Chinese stock market crash in 2015. Financial Management, 53(2), 291–325.

Liu, Y., Miletkov, M. K., Wei, Z., & Yang, T. (2015). Board independence and firm performance in China. Journal of Corporate Finance, 30, 223–244. https://doi.org/10.1016/j.jcorpfin.2014.12.004

Miller, G. S. (2006). The press as a watchdog for accounting fraud. Journal of Accounting Research, 44(5), 1001–1033. https://doi.org/10.1111/j.1475-679X.2006.00224.x

Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, XLVIII(3), 261–297. https://doi.org/10.1136/bmj.2.3594.952

Rajkovic, T. (2020). Lead independent directors and investment efficiency. Journal of Corporate Finance, 64(June), 101690. https://doi.org/10.1016/j.jcorpfin.2020.101690

Roychowdhury, S., Shroff, N., & Verdi, R. S. (2019). The effects of financial reporting and disclosure on corporate investment: A review. Journal of Accounting and Economics, 68(2–3), 101246. https://doi.org/10.1016/j.jacceco.2019.101246

Zhong, M., & Gao, L. (2017). Does corporate social responsibility disclosure improve firm investment efficiency? Evidence from China. Review of Accounting and Finance, 16(3), 348–365. https://doi.org/10.1108/RAF-06-2016-0095