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Financial flexibility, investment efficiency and effective corporate governance mechanisms have been issues of concern to stakeholders. Yet, little empirical evidence on the combined moderating effects investment efficiency and corporate governance mechanisms on the nexus between financial flexibility and firm performance. This study aims to address this gap and extend the extant literature by examining the moderating effects of corporate governance and investment efficiency on the nexus between financial flexibility and financial performance.

The empirical study is based on progression analysis using a sample of 13,865 US listed companies selected from BoardEx (WRDS) for the period (2010–2022) with 89,198 firm-year observations.

Findings of this study indicate that financial flexibility improves firm value as well as accounting performance. Furthermore, the results reveal that both investment efficiency and corporate governance moderate the effect of financial flexibility on firm performance. The authors complement and extend the literature on the optimal investment strategies domain by showing that the combined impact of corporate governance mechanisms and investment efficiency strengthens the nexus between financial flexibility and firm performance.

Key limitations of this study due to the characteristics of the sample selection: country-specific context and proxies used by this study.

Findings of this study have managerial and theoretical implications for firms’ boardrooms, institutional and individual investors, regulators, academics and other stakeholders regarding behavioural aspects of investment decision-making.

The authors’ novel contribution to the extant literature is articulated by the conceptual framework underlying this study and by the new evidence regarding exploring the combined effect of corporate governance mechanisms on nexus between financial flexibility and companies’ performance.

Previous literature posits that corporate governance and information asymmetry are the main factors in making efficient investments. Meanwhile, a growing body of studies is of the opinion that corporate governance can also mitigate the problem of information asymmetry and consequently exerts significant impacts on the association between information asymmetry and investment efficiency. This study aims to analyze the impact of corporate governance and information asymmetry on investment efficiency. It also tests the moderating role of corporate governance in the relationship between information asymmetry and investment efficiency.

The sample consists of 4,082 firms domiciled in 20 developed countries over the years from 2003 to 2019, including 33,812 firm-year observations. The bid–ask spread is used as a proxy for information asymmetry. To measure corporate governance performance, a proxy provided by ASSET4 is employed, and to determine the optimal levels of investments, we relied on the growth opportunity. To estimate the models, ordinary least squares and generalized method of moment are used.

The results reveal that information asymmetry is inversely related to investment efficiency, and, corporate governance mitigates this negative association.

This paper sheds light on the role of corporate governance in firms as a lever for mitigating information asymmetry and tries out information asymmetry and agency theories in relation to the impact of information asymmetry on investment efficiency. It also confirms the theory stating that corporate governance can be considered as a determinant of investment efficiency.

This study aims to examine the effect of corporate risk disclosure on investment efficiency. This study also seeks to contribute to existing literature of corporate risk disclosure by investigating voluntary and mandatory risk disclosure and its effect on the investment efficiency.

This study used two measures of corporate risk disclosure, level and quantity of corporate risk disclosure. A content analysis approach is adopted for non-financial Malaysian firms over the period 2010–2018.

The empirical results show that level of corporate risk disclosure leads toward efficient investment, whereas quantity of corporate risk disclosure causes inefficient investment when firms disclose more voluntary risks. Further, categorizing corporate risk disclosure into mandatory and voluntary risk disclosure, this study finds that voluntary risk disclosure tends to have higher investment inefficiency, while no evidence was found for mandatory risk disclosure.

This paper contributes to narrow stream of research investigating corporate risk disclosure through level and quantity contributing to the understanding of the level and quantity of risk disclosure in determining organizational investment efficiency.

Corporate site visits increase labor investment efficiency.

Our empirical model for the baseline analysis follows those of Jung et al. (2014) and Ghaly et al. (2020).

We show that corporate site visits are associated with significantly higher labor investment efficiency; more specifically, site visits reduce both over-hiring and under-hiring of employees. The effect of site visits on labor investment efficiency is more pronounced for firms with higher labor adjustment costs, greater financial constraints, weaker corporate governance and lower financial reporting quality. We also find that site visits mitigate labor cost stickiness.

First, while the literature has suggested how the presence of institutional investors and analysts may affect labor investment decisions, we focus on institutional investors and analysts’ activities and interactions with firm executives. We provide direct evidence that institutional investors and analysts may use corporate site visits to improve labor investment efficiency. Second, our study adds to a line of recent studies on how corporate site visits reduce information asymmetry and agency conflicts. We show that corporate site visits allow institutional investors and analysts to influence labor investment efficiency. We also provide new evidence that corporate site visits reduce labor cost stickiness.

This study examines whether and how the legal origin of foreign institutional investors (FIIs) impacts corporate investment efficiency.

The study employs a large panel dataset of firms from 32 non-USA countries from 2005 to 2018. Financial and institutional ownership data are obtained from the COMPUSTAT Global and Public Ownership databases in S&P Capital IQ, respectively. The study employed ordinary least squares (OLS) regression with year and firm fixed effects. In addition, two-stage least squares with instrumental variable regression (2SLS-IV) and propensity score matching (PSM) approaches were employed to address the potential endogeneity.

The findings of this study suggest that common- and civil-law FIIs differ in their monitoring capabilities to promote investment efficiency. The authors find evidence that increased equity ownership by common-law FIIs, not civil-law investors, strengthens the investment-Q sensitivity, resulting in higher investment efficiency. Consistent with the monitoring and information channel, the results further indicate that the positive impact of common-law FIIs on investment efficiency is stronger in host environments susceptible to agency conflicts and information asymmetry.

This study offers novel evidence on the heterogeneous monitoring role of FIIs with regard to their home countries' legal origins and their impact on investment efficiency in an international context.

In this study, the authors explore the association between employee education level and the efficiency of corporate investment using data from a sample of Chinese listed firms during the period from 2011 to 2018. By examining the impact of education on investment efficiency, the authors' study provides valuable insights that contribute to a deeper understanding of the underlying economic mechanisms related to education.

The authors conduct multivariate regression analyses to examine the relationship between investment efficiency (following Richardson, 2006) and the level of employee education, along with a series of control variables. To ensure the reliability of the authors' findings, the authors subject the their results to a comprehensive set of robustness tests, such as a staggered difference-in-difference (DiD) regression approach, an instrumental variable (IV) method and the use of alternative employee education level and investment efficiency measurements.

The findings offer compelling evidence that higher levels of education have a positive impact on firms' investment efficiency, and this effect remains robust across various model specifications and endogeneity considerations. Moreover, the influence of education is more pronounced in firms that prioritize employee training, maintain effective internal communication and offer attractive financial rewards. Furthermore, the results suggest that the relationship between education and investment efficiency is influenced by the firms' business nature and competitive environment. Factors such as business complexity, labor intensity and business location also play a role in shaping the impact of education on investment outcomes.

The study emphasizes the crucial role of education in influencing investment decisions and performance within firms. By delving into this previously unexplored area, the authors' research contributes to the existing literature, establishing that the level of employee education is a significant determinant of corporate investment efficiency. This valuable insight has substantial implications for firms aiming to enhance their investment decision-making processes and overall performance. Understanding the positive impact of education on investment efficiency can empower organizations to leverage their human capital effectively and achieve better investment outcomes, ultimately contributing to long-term success and competitiveness in the market.

The purpose of the paper is to investigate the association between corporate social responsibility (CSR) and investment efficiency (INE) in Bangladeshi pharmaceutical companies and to explore the moderating role of corporate reputation in this relationship.

The paper employs a two-step method, with stage 1 involving the development of a theoretical model using the literature's strategic framework and stage 2 using structural equation modelling (SEM) to investigate the relationships between variables. The data set used in the analysis includes 296 responses from senior executives/managers and subordinates at Bangladeshi pharmaceutical firms.

The study finds that CSR activities that focus on customers, employees and the community significantly affect INE, as well as the extended stakeholders, and that company reputation moderates this relationship. The effect of CSR on INE differs between well-established companies and business firms with favourable reputations.

The paper contributes to understanding the relationship between CSR and INE in a developing country context and highlights the importance of corporate reputation in this relationship. The findings suggest that companies can enhance their INE through CSR initiatives and that a positive reputation can strengthen this relationship further.

The study adds to the limited literature on CSR and INE in developing countries and provides new insights into the moderating role of corporate reputation in this relationship.

The purpose of this paper is to examine the impact of directors’ and officers’ liability insurance (D&O insurance hereafter) on corporate governance and firm performance, with a specific focus on investment efficiency.

Using a sample of Chinese A-share listed firms from the period 2007 to 2020, this study uses Ordinary Least Squares regressions to investigate the research questions, as well as moderating and mediating effects. Additionally, alternative measures of investment efficiency are used, and the Heckman two-stage model and propensity score matching model are used to demonstrate the consistency of the findings and to mitigate the risk of endogeneity.

The findings of this study suggest that purchasing D&O insurance has a detrimental impact on corporate investment efficiency, particularly in the context of over-investment activities; robust internal governance mechanisms, exemplified by a higher shareholding ratio of the top shareholder and enhanced internal control quality, alleviate this negative effect; and financing constraints act as a mediating factor in the association between D&O insurance and investment efficiency.

Corporate investment efficiency is of significant importance for both national macroeconomic growth and micro-enterprise development. Notably, the prevalence of D&O insurance among Chinese firms is progressively increasing, thus exerting a growing influence. This study contributes to the existing literature on D&O insurance and corporate investment efficiency, providing valuable insights into the economic impact of D&O insurance on Chinese firms. The empirical evidence presented herein facilitates future reforms and adjustments.

This study examines the non-linear effect of board independence on the investment efficiency of listed firms worldwide. This study further tests whether the COVID-19 pandemic, industry competition and economic development influence the relationship between board independence and investment efficiency.

The data are retrieved from the Thomson Reuters (Refinitiv) database and include international data from 33 countries, comprising 21,363 firm-year observations. The authors' regression analyses include firm-specific variables as controls that may impact investment efficiency. The authors also perform various robustness tests including, alternative measures of investment efficiency, weighted least squares regression, quantile regression and endogeneity issues.

The results reveal a non-linear relationship between board independence and investment efficiency. Specifically, the relationship follows a U-shaped pattern, indicating that the negative impact of board independence on investment efficiency becomes positive after it reaches its optimal point, thus supporting optimal board structure theory. Interestingly, the authors find no significant evidence of board independence’s effect on investment efficiency during the pandemic. In contrast, the relationship between board independence and investment efficiency is significant only during the non-pandemic period. Furthermore, the authors discover evidence of a U-shaped relationship in both emerging and developed markets, as well as in industries with high and low competition.

The authors' study discovers new evidence on the non-linear impact of board independence on investment efficiency, which has not been explored previously in existing research.

This study has practical implications for investors by emphasising the importance of corporate governance and the appointment of independent directors. Investors should consider the findings of this study when making decisions related to corporate governance, as they can impact a firm's investment efficiency.

Despite a considerable body of literature exploring the link between corporate governance and investment effectiveness, there is a dearth of research on the non-linear effects of board independence. Furthermore, the effects of the COVID-19 pandemic, industry competition and economic development remain unexplored.

This paper aims to explore whether environmental, social and governance (ESG) performance is positively associated with firm investment efficiency (IE) in emerging economies. It also examines whether board cultural diversity can moderate the ESG–IE relationship.

This paper uses a cross-country sample of listed firms located in seven emerging countries over the 2011–2019 period. The authors use a fixed effect panel regression to empirically test the hypotheses. The authors also use a lagged model and a Heckman’s (1979) two-stage procedure to mitigate potential endogeneity issues. In addition, a two-stage least squares regression analysis was done as an additional robustness check.

This study finds that firms with stronger ESG performance have a higher investment efficiency. Interestingly, this study finds that board cultural diversity negatively moderates the impact of ESG performance on IE for firms operating in settings prone to overinvestment. This result suggests that ESG performance plays a less important role in mitigating managers' tendencies to overinvest when corporate boards have more foreign directors. However, the authors do not find such evidence in firms prone to underinvestment. These findings hold after using an alternative measure of IE and controlling for endogeneity concerns.

This paper adds to the existing body of knowledge in three dimensions. First, to the best of the authors’ knowledge, this is the first cross-country study that investigates the linkage between ESG performance and corporate IE in the context of emerging countries. Second, the authors have enriched the prior literature by examining the moderating effect of board cultural diversity on the positive association between ESG performance and corporate IE. Finally, this study has important implications for policymakers and capital suppliers in emerging countries, which strive to facilitate the efficient allocation of scarce resources.