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Does gambling culture affect firms’ investment efficiency?

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  • Lin, Nan
  • Chen, Han
  • Zhang, Pengdong
  • Liu, Weiqian

Abstract

This study explores the influence of gambling culture on investment efficiency. Using local lottery sales to measure gambling culture, we find that gambling culture is significantly negatively associated with investment efficiency. The effect is mainly manifested as the over-investment caused by the gambling culture. The paper also implies that state ownership, highly educated management teams, equity incentives, and higher corporate transparency can help mitigate the effect of gambling culture. Moreover, agency cost and risk-taking level play the role of intermediary effect. Our findings are still robust when addressing the endogeneity issue with various methods.

Suggested Citation

  • Lin, Nan & Chen, Han & Zhang, Pengdong & Liu, Weiqian, 2022. "Does gambling culture affect firms’ investment efficiency?," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322003713
    DOI: 10.1016/j.frl.2022.103148
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    Cited by:

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    3. Zhang, Jinjin & Chen, Huili & Zhang, Pengdong & Jiang, Min, 2022. "Product market competition and the value of corporate cash: An agency theory explanation," International Review of Financial Analysis, Elsevier, vol. 84(C).
    4. Lin, Nan & Li, Ao & Ke, Jinjun & Yuan, Jiayue & Chen, Han, 2023. "The governance role of corporate party organization on innovation," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 657-670.
    5. Pan, Di & Chen, Wenchuan & Zhang, Jinjin & Fang, Hongrui, 2023. "Government accounting supervision and excessive perk consumption of executives: Evidence from China," Finance Research Letters, Elsevier, vol. 57(C).
    6. Lin, Xiaowei & Wang, Jianyong & Zhang, Lingli & Chen, Ying, 2023. "Real effect of bond yield liberalization on corporate investment," Finance Research Letters, Elsevier, vol. 52(C).
    7. Lin, Xiaowei & Li, Ao & Zhang, Pengdong & Chen, Wenchuan, 2023. "The disciplinary role of product market competition on cash holding," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 653-671.
    8. Zhang, Mengtao & Li, Wenwen & Luo, Yalin & Chen, Wenchuan, 2023. "Government audit supervision, financialization, and executives' excess perks: Evidence from Chinese state-owned enterprises," International Review of Financial Analysis, Elsevier, vol. 89(C).
    9. Huang, Dayan & Kou, Aiju & Liu, Chengyi & Liu, Shanmin, 2023. "The effect of PWS arrangements on M&A activities," Finance Research Letters, Elsevier, vol. 52(C).
    10. Zhao, Lei & Li, Na & Wu, Yanjun, 2023. "Institutional investors' site visits, information asymmetry, and investment efficiency," International Review of Financial Analysis, Elsevier, vol. 88(C).
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    More about this item

    Keywords

    Gambling culture; Investment efficiency; Risk-taking; Agency cost;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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