Does Confucianism Reduce Corporate Over-Investment? Evidence from China

다국어 초록 (Multilingual Abstract)

In this study, we argue that Confucianism, as an informal institution, mitigates agency problems and thus curbs managerial over-investment behavior. Using a sample of Chinese listed firms over the period 2000 to 2015, we find strong evidence that Confucianism is negatively associated with over-investment. Furthermore, we document that the negative association between Confucianism and over-investment is weaker for state-owned enterprises than for non-state-owned enterprises. Overall, the findings enrich our understanding that informal institutions can play a significant role in influencing corporate behavior.

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