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Confucianism, openness to the West, and corporate investment efficiency
Author(s) -
Chen Lei,
Jin Zhi,
Ma Yongqiang,
Xu Hui
Publication year - 2019
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12173
Subject(s) - openness to experience , investment (military) , globalization , quality (philosophy) , emerging markets , work (physics) , discipline , mechanism (biology) , business , monetary economics , economics , market economy , finance , political science , sociology , psychology , social psychology , social science , mechanical engineering , philosophy , epistemology , politics , law , engineering
This study presents robust findings that Confucianism significantly improves investment efficiency of Chinese listed firms and that the improvement is achieved through decreasing overinvestment without inducing underinvestment. Financial reporting quality is found to be an important mechanism for the disciplinary effect of Confucianism to work. More importantly, we provide strong and consistent evidence that openness to the West neutralizes the role of the Confucianism in overinvestment. Against the backdrop of globalization, this paper offers valuable references to emerging markets that experience intensive interactions with developed economies.