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Open Access
Article
Publication date: 4 June 2020

Nghia Nguyen Trong and Cong Thanh Nguyen

Debt, dividend and investment policy constitutes a company's important financial decisions to determine firm performance. The research emphasizes on the problem of overinvestment…

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Abstract

Purpose

Debt, dividend and investment policy constitutes a company's important financial decisions to determine firm performance. The research emphasizes on the problem of overinvestment, a phenomenon that worsens firm operation. Furthermore, it clarifies the moderation role of debt and dividend policy in mitigating the negative effect of overinvestment on firm performance in the case of Vietnamese listed companies.

Design/methodology/approach

The research uses all financial statement of non-financial Vietnamese listed companies on Ho Chi Minh and Hanoi Stock Exchange in the period of 2008–2018. The data are collected from Thomson Reuters Eikon. The final data set is comprised of 669 listed companies. The study measures overinvestment though investment demand function and HP filter. Moreover, the research employs the dynamic model, so it has to apply the SGMM method to deal with the problem of endogeneity caused by the lagged dependent variable.

Findings

The research finds that overinvestment is negatively associated with firm performance. Debt or dividend policy separately can moderate the negative effect of overinvestment on firm performance. However, when these two policies are combined, they lessen the positive interaction impact of each policy due to the substitution between debt and dividend policy.

Research limitations/implications

The research may have two limitations. Firstly, the research measures overinvestment indirectly through investment demand function and HP filter. These two measures only help identify the sign that companies may have the problem of overinvestment because we cannot determine whether they overinvest or not in reality. Secondly, when using interaction variables, the problem of multicollinearity may be higher, and this may adjust the signs and significance level of variables in the models.

Practical implications

Practically, the research proposes three policy recommendations. Firstly, a company can exploit debt or dividend policy to limit excessive free cash flow in order to constrain the problem of overinvestment. Secondly, a company should enhance its corporate governance to resolve agency problems. Thirdly, the government should make the financial sector more transparent and effective to improve monitoring functions of various parties in the capital market.

Social implications

Overinvestment sometimes can cause social issues. Overinvestment means that companies make ineffective investment. If they continue this situation over a long time, companies may have financial distress or even go bankruptcy. As a result, it will slow down economic growth and increase unemployment in the economy.

Originality/value

The research is supposed to make two great contributions to the existing empirical studies in two aspects. Firstly, it is the first attempt to take into consideration the interaction between overinvestment and financial policies. Secondly, it helps enhance the fundamental stance of the agency theory, which supports the interdependence of debt, dividend and investment policy.

Details

Journal of Asian Business and Economic Studies, vol. 28 no. 1
Type: Research Article
ISSN: 2515-964X

Keywords

Open Access
Article
Publication date: 24 November 2023

Ornella Tanga Tambwe, Clinton Ohis Aigbavboa and Opeoluwa Akinradewo

Data represents a critical resource that enables construction companies’ success; thus, its management is very important. The purpose of this study is to assess the benefits of…

Abstract

Purpose

Data represents a critical resource that enables construction companies’ success; thus, its management is very important. The purpose of this study is to assess the benefits of construction data risks management (DRM) in the construction industry (CI).

Design/methodology/approach

This study adopted a quantitative method and collected data from various South African construction professionals with the aid of an e-questionnaire. These professionals involve electrical engineers, quantity surveyors, architects and mechanical, as well as civil engineers involved under a firm, or organisation within the province of Gauteng, South Africa. Standard deviation, mean item score, non-parametric Kruskal–Wallis H test and exploratory factor analysis were used to analyse the retrieved data.

Findings

The findings revealed that DRM enhances project and company data availability, promotes confidentiality and enhances integrity, which are the primary benefits of DRM that enable the success of project delivery.

Research limitations/implications

The research was carried out only in the province of Gauteng due to COVID-19 travel limitations.

Practical implications

The construction companies will have their data permanently in their possession and no interruption will be seen due to data unavailability, which, in turn, will allow long-term and overall pleasant project outcomes.

Originality/value

This study seeks to address the benefits of DRM in the CI to give additional knowledge on risk management within the built environment to promote success in every project.

Details

Journal of Engineering, Design and Technology , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1726-0531

Keywords

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