{"title":"News sentiment and investment efficiency: Evidence from China","authors":"Yuan-Teng Hsu, Min Hua, Heng Liu, Qingren Wang","doi":"10.1111/eufm.12454","DOIUrl":null,"url":null,"abstract":"<p>This study investigates the impact of media sentiment on firms' investment efficiency in the Chinese market during 2007–2017. We find that increased media sentiment can lead to overinvestment and thus distort investment efficiency, but it has no significant effect on underinvestment. Further, mediation analysis shows that financing constraints mediates the media sentiment effects on overinvestment. To mitigate potential endogenous problems, we employ instrumental variable approach and propensity score matching method. The main findings hold after a battery of robustness tests. Further tests show that corporate governance factors can ameliorate the adverse effect of news sentiment on corporate investment efficiency.</p>","PeriodicalId":47815,"journal":{"name":"European Financial Management","volume":"30 3","pages":"1587-1617"},"PeriodicalIF":2.1000,"publicationDate":"2023-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Financial Management","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/eufm.12454","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
This study investigates the impact of media sentiment on firms' investment efficiency in the Chinese market during 2007–2017. We find that increased media sentiment can lead to overinvestment and thus distort investment efficiency, but it has no significant effect on underinvestment. Further, mediation analysis shows that financing constraints mediates the media sentiment effects on overinvestment. To mitigate potential endogenous problems, we employ instrumental variable approach and propensity score matching method. The main findings hold after a battery of robustness tests. Further tests show that corporate governance factors can ameliorate the adverse effect of news sentiment on corporate investment efficiency.
期刊介绍：
European Financial Management publishes the best research from around the world, providing a forum for both academics and practitioners concerned with the financial management of modern corporation and financial institutions. The journal publishes signficant new finance research on timely issues and highlights key trends in Europe in a clear and accessible way, with articles covering international research and practice that have direct or indirect bearing on Europe.
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