Overinvestment Propensity and Firm’s Value

• 발행기관: 한국유통과학회
• 저자명: Ki Se LEE Seong Il JEON
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.3, 49~59쪽, 전체 11쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.03.30

영문 초록

This study empirically analyzes the effect of firm overinvestment propensity on the value relevance of capital investment. In order to verify this point, this study attempts to analyze the value relevance of overinvestment firms’ capital investments. The analysis was performed according to the model of Biddle et al. (2009) and McNichols and Stubben (2008) on overinvestment propensity for analysis, and the results are as follows. First, in terms of overinvestment, corporate capital investment shows negative value relevance, so the excessive investments above reasonable levels have reduced firm’s value. In contrast, the value relevance for capital investment showed a positive value for firms whose managerial propensity changed, that is, from under-investment in the previous year, it shifted to overinvestment in the current year. Second, as a result of analyzing the value relevance of the investment increase according to the investment propensity, the overinvestment firms showed negative values and the underinvested firms showed positive values; thus, the value relevance of the increase in investment was opposite to the investment propensity of the firm. These findings confirm that the stock market differentially evaluates investment efficiency according to investment propensity, continuity, and investment alterations, and reflects it appropriately in the firm’s value.

목차

1. Introduction

2. Literature Review

3. Research Methods and Materials

4. Empirical Analysis

5. Conclusions

References

키워드

Investment Decisions Capital Investment Overinvestment Firm’s Value