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Does going public imply short-termism in investment behavior? Evidence from China

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  • Yu, Zhuangxiong
  • Zhang, Jie
  • Li, Jie

Abstract

Adopting a large panel of Chinese manufacturing firms together with the data of listed firms for the period 1998–2007, this paper aims to examine whether Asker et al.'s (2015) argument on the short-termism demonstrated in the investment behavior of listed firms holds for China. We document that listed firms engage in more investments and respond more to changes in investment opportunities as compared to unlisted ones with similar size and age in the same industries, and Asker et al.'s (2015) short-termism argument only holds for firms facing sufficiently low financing constraints.

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  • Yu, Zhuangxiong & Zhang, Jie & Li, Jie, 2020. "Does going public imply short-termism in investment behavior? Evidence from China," Emerging Markets Review, Elsevier, vol. 42(C).
    • Handle: RePEc:eee:ememar:v:42:y:2020:i:c:s1566014119305138
    DOI: 10.1016/j.ememar.2019.100672
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    More about this item

    Keywords

    Listed firms; Short-termism; Investment; China;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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