Strategic radicality and inefficient investment of enterprises

Abstract

Using the data of all A-share listed companies in Shanghai and Shenzhen stock exchanges from 2011 to 2020 as research samples, this paper analyzes the relationship between corporate strategic radicality and inefficient investment from the perspective of information asymmetry and agency problems. The results of this paper show that: Strategic aggressiveness is significantly positively correlated with inefficient investment; The more radical the strategy, the more over investment is; Moreover, a good corporate governance mechanism will reduce the positive correlation between the two. Further research finds that the economic consequence of the positive correlation between the two is to aggravate corporate risk.