Environmental uncertainty, financing constraints and corporate investment: Evidence from China

This study uses A-share listed companies' financial data in China's Shanghai Stock Exchange from 2010 to 2019 to examine the impact of environmental uncertainty and financing constraints on corporate investment. It is found that environmental uncertainty not only restrains corporate invest...

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Bibliographic Details
Published in:Pacific-Basin finance journal 2021-12, Vol.70, p.101665, Article 101665
Main Authors: Li, Kaifeng, Xia, Bobo, Chen, Yun, Ding, Ning, Wang, Jie
Format: Article
Language:English
Subjects:
Corporate investment efficiency
Corporate investment level
Environmental uncertainty
Financing constraints
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Summary:This study uses A-share listed companies' financial data in China's Shanghai Stock Exchange from 2010 to 2019 to examine the impact of environmental uncertainty and financing constraints on corporate investment. It is found that environmental uncertainty not only restrains corporate investment directly but also reduces corporate investment through increased financing constraints indirectly. This negative effect is even more obvious in small-scale enterprises. Further research finds that environmental uncertainty has a heterogeneous impact on corporate investment efficiency. While inhibiting overinvested corporate investment behaviour and improving their investment efficiency, higher environmental uncertainty will reduce underinvested corporate investment and worsen their investment efficiency. •Focuses on the impact of micro-environment uncertainty on corporate investment.•Study the indirect channels through which environmental uncertainty affects corporate investment.
ISSN:0927-538X
1879-0585
DOI:10.1016/j.pacfin.2021.101665