Pub Date : 2025-06-01Epub Date: 2025-05-10DOI: 10.1016/j.jbef.2025.101061
Sanghak Choi , Hongmin Chun
This study investigates the influence of CEOs' early-life exposure to war on corporate philanthropic donations, focusing on the Korean War as a unique historical context. The findings reveal a significant positive relationship between CEOs' early-life war experiences and the magnitude of corporate donations, particularly among those aged six to 15 during the war and from regions with higher war severity. Robustness checks, including propensity score matching and regression discontinuity design, confirm the validity of these results. The research contributes to upper echelons and imprinting theories by demonstrating how formative traumatic experiences shape altruistic decision-making and corporate policies. Moreover, it identifies moderating factors such as financial constraints, Chaebol affiliation, and foreign ownership weaken this relationship by limiting CEOs' decision-making autonomy or resources.
{"title":"CEO’s early-life war-experience and corporate philanthropic donation: Evidence from the Korean War","authors":"Sanghak Choi , Hongmin Chun","doi":"10.1016/j.jbef.2025.101061","DOIUrl":"10.1016/j.jbef.2025.101061","url":null,"abstract":"<div><div>This study investigates the influence of CEOs' early-life exposure to war on corporate philanthropic donations, focusing on the Korean War as a unique historical context. The findings reveal a significant positive relationship between CEOs' early-life war experiences and the magnitude of corporate donations, particularly among those aged six to 15 during the war and from regions with higher war severity. Robustness checks, including propensity score matching and regression discontinuity design, confirm the validity of these results. The research contributes to upper echelons and imprinting theories by demonstrating how formative traumatic experiences shape altruistic decision-making and corporate policies. Moreover, it identifies moderating factors such as financial constraints, Chaebol affiliation, and foreign ownership weaken this relationship by limiting CEOs' decision-making autonomy or resources.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101061"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144072295","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-04-05DOI: 10.1016/j.jbef.2025.101047
Eyal Lahav , Tal Shavit
Background
In recent decades, the evolving job market has highlighted the importance of work-life balance (WLB), yet there remains ambiguity around individuals' awareness of WLB's future consequences and its influence on their choices.
Methods
This study introduces a novel method for assessing the perceived impact of three components of one's current WLB—stress and burnout, boundaries, and flexibility—on one’s future financial situation, future health, and future community relations. Additionally, we evaluate the validity of our approach by investigating how the perceived future impact affects decision making related to WLB and job compensation (salary; pension).
Results
We find large differences between the perceived impact of each WLB component on each future aspect of life. We then demonstrate the linkage between the perceived impact and individuals’ current financial decision-making processes regarding WLB management.
Conclusions
Our results offer managers insights for informed decision-making on allocating resources to WLB components in organizations.
{"title":"The perceived impact of current work–life balance on one’s financial future","authors":"Eyal Lahav , Tal Shavit","doi":"10.1016/j.jbef.2025.101047","DOIUrl":"10.1016/j.jbef.2025.101047","url":null,"abstract":"<div><h3>Background</h3><div>In recent decades, the evolving job market has highlighted the importance of work-life balance (WLB), yet there remains ambiguity around individuals' awareness of WLB's future consequences and its influence on their choices.</div></div><div><h3>Methods</h3><div>This study introduces a novel method for assessing the perceived impact of three components of one's current WLB—stress and burnout, boundaries, and flexibility—on one’s future financial situation, future health, and future community relations. Additionally, we evaluate the validity of our approach by investigating how the perceived future impact affects decision making related to WLB and job compensation (salary; pension).</div></div><div><h3>Results</h3><div>We find large differences between the perceived impact of each WLB component on each future aspect of life. We then demonstrate the linkage between the perceived impact and individuals’ current financial decision-making processes regarding WLB management.</div></div><div><h3>Conclusions</h3><div>Our results offer managers insights for informed decision-making on allocating resources to WLB components in organizations.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101047"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143816636","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-04-18DOI: 10.1016/j.jbef.2025.101053
Long Chen , June Woo Park , Albert Tsang , Xiaofang Xu
Left-handers represent a notable portion of the global population, yet their characteristics remain somewhat enigmatic. One key question is whether they are inherently more creative than their non-left-handed counterparts. Our study addresses this question by examining how firm innovation varies with the handedness of their CEOs. Using a novel sample of left-handed CEOs, we find that they tend to have greater innovation success than their counterparts. Using forced turnover as an exogenous shock, we conduct a CEO handedness change analysis and find that firms transitioning from a right-handed to a left-handed CEO tend to have more patents and citations, but not vice versa. We also identify a possible mechanism for this effect: left-handed CEOs tend to hire more immigrant inventors or serve as inventors themselves, which likely enhances the firm’s innovation output. Overall, our study highlights CEO handedness as an observable personal characteristic that could serve as a predictor of a firm’ creativity.
{"title":"The puzzle of left-handedness: Evidence from corporate innovation","authors":"Long Chen , June Woo Park , Albert Tsang , Xiaofang Xu","doi":"10.1016/j.jbef.2025.101053","DOIUrl":"10.1016/j.jbef.2025.101053","url":null,"abstract":"<div><div>Left-handers represent a notable portion of the global population, yet their characteristics remain somewhat enigmatic. One key question is whether they are inherently more creative than their non-left-handed counterparts. Our study addresses this question by examining how firm innovation varies with the handedness of their CEOs. Using a novel sample of left-handed CEOs, we find that they tend to have greater innovation success than their counterparts. Using forced turnover as an exogenous shock, we conduct a CEO handedness change analysis and find that firms transitioning from a right-handed to a left-handed CEO tend to have more patents and citations, but not vice versa. We also identify a possible mechanism for this effect: left-handed CEOs tend to hire more immigrant inventors or serve as inventors themselves, which likely enhances the firm’s innovation output. Overall, our study highlights CEO handedness as an observable personal characteristic that could serve as a predictor of a firm’ creativity.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101053"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143855830","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-04-25DOI: 10.1016/j.jbef.2025.101055
Ruoyu Zhu , Kehu Tan , Xiaohui Xin , Qipo Wang
Leverage manipulation refers to fraudulent behavior in which a firm deliberately lowers its book leverage through various accounting techniques to achieve a variety of objectives. However, in the era of rapid growth of fintech, can it curb this fraudulent behavior? To answer this question, we investigate the impact of fintech on corporate leverage manipulation from the perspective of capital demands. We find that fintech can inhibit corporate leverage manipulation. Mechanism analysis demonstrates that fintech weakens firms’ incentives to manipulate leverage by lowering firms’ unreasonable excessive capital demands arising from inefficient investments and the satisfaction of management’s desires. Furthermore, the inhibiting effect of fintech on corporate leverage manipulation is more pronounced in firms with high financing constraints and in tech-industries. We shed light on the latent mechanism between fintech and corporate leverage manipulation.
{"title":"Fintech and corporate leverage manipulation: A new explanation from the perspective of capital demands","authors":"Ruoyu Zhu , Kehu Tan , Xiaohui Xin , Qipo Wang","doi":"10.1016/j.jbef.2025.101055","DOIUrl":"10.1016/j.jbef.2025.101055","url":null,"abstract":"<div><div>Leverage manipulation refers to fraudulent behavior in which a firm deliberately lowers its book leverage through various accounting techniques to achieve a variety of objectives. However, in the era of rapid growth of fintech, can it curb this fraudulent behavior? To answer this question, we investigate the impact of fintech on corporate leverage manipulation from the perspective of capital demands. We find that fintech can inhibit corporate leverage manipulation. Mechanism analysis demonstrates that fintech weakens firms’ incentives to manipulate leverage by lowering firms’ unreasonable excessive capital demands arising from inefficient investments and the satisfaction of management’s desires. Furthermore, the inhibiting effect of fintech on corporate leverage manipulation is more pronounced in firms with high financing constraints and in tech-industries. We shed light on the latent mechanism between fintech and corporate leverage manipulation.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101055"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143902150","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
By analyzing negative peer disclosures (NPDs) on Twitter, we provide evidence that crash risk decreases after tweeted firms are the subject of adverse peer tweets. NPDs also act as catalysts for companies to implement strategic changes, suggesting that managers are motivated to turn things around in response to negative tweets from their peers. Managers also take less risk and reduce financial statement opaqueness as a result. In scale and importance, the strategic change channel appears to be the main mechanism by which NPDs reduce stock price crashes. Moreover, in response to strategic shifts, auditors increase audit fees and analysts issue less optimistic earnings forecasts when they cover tweeted firms. Overall, our study illustrates the transformative effects of social media on product rivalry and market outcomes, and highlights NPDs as powerful tools for firm competition that hold managers accountable.
{"title":"Negative peer disclosures, crash risk, and strategic change","authors":"Scott Below , Oneil Harris , Charmaine Linton , Thanh Ngo","doi":"10.1016/j.jbef.2025.101063","DOIUrl":"10.1016/j.jbef.2025.101063","url":null,"abstract":"<div><div>By analyzing negative peer disclosures (NPDs) on Twitter, we provide evidence that crash risk decreases after tweeted firms are the subject of adverse peer tweets. NPDs also act as catalysts for companies to implement strategic changes, suggesting that managers are motivated to turn things around in response to negative tweets from their peers. Managers also take less risk and reduce financial statement opaqueness as a result. In scale and importance, the strategic change channel appears to be the main mechanism by which NPDs reduce stock price crashes. Moreover, in response to strategic shifts, auditors increase audit fees and analysts issue less optimistic earnings forecasts when they cover tweeted firms. Overall, our study illustrates the transformative effects of social media on product rivalry and market outcomes, and highlights NPDs as powerful tools for firm competition that hold managers accountable.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101063"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178010","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-03-02DOI: 10.1016/j.jbef.2025.101030
Shoaib Ali , Jinxin Cui
Using the novel Quantile VAR connectedness approach, this paper investigates the connectedness between G7 equity markets and derivative tokens across various quantiles. Empirical results demonstrate that the spillovers at the higher and lower quantiles are significantly higher than at the mean and median quantiles. Except for Japan, other G7 equity markets are net transmitters, while the derivative tokens are net recipients. The dynamic connectedness indices vary with time and quantiles and they are more volatile at the extreme quantiles. The optimal hedging strategy offers higher risk reduction effectiveness, especially the US equity-token pairs. Our findings offer implications for various stakeholders.
{"title":"Beyond averages: Quantile connectedness between G7 equity markets and derivative tokens","authors":"Shoaib Ali , Jinxin Cui","doi":"10.1016/j.jbef.2025.101030","DOIUrl":"10.1016/j.jbef.2025.101030","url":null,"abstract":"<div><div>Using the novel Quantile VAR connectedness approach, this paper investigates the connectedness between G7 equity markets and derivative tokens across various quantiles. Empirical results demonstrate that the spillovers at the higher and lower quantiles are significantly higher than at the mean and median quantiles. Except for Japan, other G7 equity markets are net transmitters, while the derivative tokens are net recipients. The dynamic connectedness indices vary with time and quantiles and they are more volatile at the extreme quantiles. The optimal hedging strategy offers higher risk reduction effectiveness, especially the US equity-token pairs. Our findings offer implications for various stakeholders.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101030"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143548469","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-04-15DOI: 10.1016/j.jbef.2025.101051
Te Bao , Brice Corgnet , Nobuyuki Hanaki , Katsuhiko Okada , Yohanes E. Riyanto , Jiahua Zhu
We compare the performance of financial professionals (CFAs) with university students in four financial forecasting tasks ranging from simple lab prediction tasks to longitudinal field prediction tasks. Although students and professionals performed similarly in the most artificial forecasting tasks, CFAs outperformed students in the field predictions. Differences in forecasting performance between finance professionals and students were explained by financial literacy, not cognitive ability.
{"title":"Financial forecasting in the lab and the field: Qualified professionals vs. smart students","authors":"Te Bao , Brice Corgnet , Nobuyuki Hanaki , Katsuhiko Okada , Yohanes E. Riyanto , Jiahua Zhu","doi":"10.1016/j.jbef.2025.101051","DOIUrl":"10.1016/j.jbef.2025.101051","url":null,"abstract":"<div><div>We compare the performance of financial professionals (CFAs) with university students in four financial forecasting tasks ranging from simple lab prediction tasks to longitudinal field prediction tasks. Although students and professionals performed similarly in the most artificial forecasting tasks, CFAs outperformed students in the field predictions. Differences in forecasting performance between finance professionals and students were explained by financial literacy, not cognitive ability.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101051"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143851332","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-03-16DOI: 10.1016/j.jbef.2025.101042
Zihan Ye , Thomas Post , Xiaopeng Zou , Shenglan Chen
We study how cognitive constraints relate to each distinct step of the planning and execution process for retirement, that is, individuals’ propensity to plan, savings goals set, and economic outcomes (wealth accumulation and portfolio choice). We find that different cognitive constraints play distinct roles: Higher advanced financial literacy (and quantitative reasoning ability) predicts a greater propensity to plan, while higher basic financial literacy and verbal cognition predict setting higher savings goals. Math-related abilities are not associated with savings goals in a systematic way. Furthermore, our evidence shows that the economic consequences of retirement planning depend on the earlier set savings goals. In comparison to non-planners, only planners with a higher savings goal (above the median) accumulate more wealth and are more likely to hold risky assets and private annuities. Our findings suggest that when crafting public policy to develop individuals’ retirement readiness, next to improving financial literacy, other targets could be to enhance cognitive skills and to support setting concrete savings goals by, for example, providing better access to planning relevant information and tools.
{"title":"Savings goals matter–Cognitive constraints, retirement planning, and downstream economic behaviors","authors":"Zihan Ye , Thomas Post , Xiaopeng Zou , Shenglan Chen","doi":"10.1016/j.jbef.2025.101042","DOIUrl":"10.1016/j.jbef.2025.101042","url":null,"abstract":"<div><div>We study how cognitive constraints relate to each distinct step of the planning and execution process for retirement, that is, individuals’ propensity to plan, savings goals set, and economic outcomes (wealth accumulation and portfolio choice). We find that different cognitive constraints play distinct roles: Higher advanced financial literacy (and quantitative reasoning ability) predicts a greater propensity to plan, while higher basic financial literacy and verbal cognition predict setting higher savings goals. Math-related abilities are not associated with savings goals in a systematic way. Furthermore, our evidence shows that the economic consequences of retirement planning depend on the earlier set savings goals. In comparison to non-planners, only planners with a higher savings goal (above the median) accumulate more wealth and are more likely to hold risky assets and private annuities. Our findings suggest that when crafting public policy to develop individuals’ retirement readiness, next to improving financial literacy, other targets could be to enhance cognitive skills and to support setting concrete savings goals by, for example, providing better access to planning relevant information and tools.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101042"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143680698","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-05-23DOI: 10.1016/j.jbef.2025.101062
Oscar Bernal , Marek Hudon , François-Xavier Ledru
This paper investigates the motives of retail investors who buy shares of social banks—double bottom line financial intermediaries whose mission is to fund social enterprises. To do so, we combine survey data and behavior in an incentivized experiment to assemble a unique dataset of social bank members and non-members. Our analysis delivers three key results. First, members exhibit a significant lack of trust towards conventional banks. Second, their decision to buy social bank shares is primarily related to non-financial motives, although financial motives still play some role. Third, we find that members do not seem to buy social bank shares to boost their social reputation. As a contribution to the critical “value” versus “values” debate, our analysis notably highlights the crucial role of non-financial motives in channeling private financial capital towards investments that may not be financially attractive but that may prove essential in addressing current global societal challenges.
{"title":"Who buys social bank shares? Exploring individual financial and non-pecuniary motives","authors":"Oscar Bernal , Marek Hudon , François-Xavier Ledru","doi":"10.1016/j.jbef.2025.101062","DOIUrl":"10.1016/j.jbef.2025.101062","url":null,"abstract":"<div><div>This paper investigates the motives of retail investors who buy shares of social banks—double bottom line financial intermediaries whose mission is to fund social enterprises. To do so, we combine survey data and behavior in an incentivized experiment to assemble a unique dataset of social bank members and non-members. Our analysis delivers three key results. First, members exhibit a significant lack of trust towards conventional banks. Second, their decision to buy social bank shares is primarily related to non-financial motives, although financial motives still play some role. Third, we find that members do not seem to buy social bank shares to boost their social reputation. As a contribution to the critical “value” versus “values” debate, our analysis notably highlights the crucial role of non-financial motives in channeling private financial capital towards investments that may not be financially attractive but that may prove essential in addressing current global societal challenges.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"46 ","pages":"Article 101062"},"PeriodicalIF":4.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178011","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-01Epub Date: 2025-01-22DOI: 10.1016/j.jbef.2025.101024
Huixia Geng , Hongbing Zhu , Wei Theng Lau , Normaziah Mohd Nor , Nazrul Hisyam Ab Razak
Motivated by the high financial distress risk (Hereafter, FDR) level and extensively inefficient investment behaviors in China, this paper aims to explore the relationship between firms’ investment efficiency and FDR. Utilizing Chinese A-share market data spanning 2008–2020, we find that over-investment linearly exacerbates FDR, while under-investment has a U-shaped relationship with FDR. Detecting the underlying mechanisms, we find that over-investment exacerbates FDR through linearly declining firms’ cash holding and investing cash flow while increasing firms financing cash flow, and under-investment impacts FDR through the inverted U-shaped relationship with operating cash flow and U-shaped relationship with firms’ financing cash flow. Our findings hold up well after various robustness tests, providing new implications of firm life circle theory and static trade-off theory in the process of investment efficiency influencing FDR.
{"title":"How does investment efficiency affect financial distress risk? Evidence from China","authors":"Huixia Geng , Hongbing Zhu , Wei Theng Lau , Normaziah Mohd Nor , Nazrul Hisyam Ab Razak","doi":"10.1016/j.jbef.2025.101024","DOIUrl":"10.1016/j.jbef.2025.101024","url":null,"abstract":"<div><div>Motivated by the high financial distress risk (Hereafter, FDR) level and extensively inefficient investment behaviors in China, this paper aims to explore the relationship between firms’ investment efficiency and FDR. Utilizing Chinese A-share market data spanning 2008–2020, we find that over-investment linearly exacerbates FDR, while under-investment has a U-shaped relationship with FDR. Detecting the underlying mechanisms, we find that over-investment exacerbates FDR through linearly declining firms’ cash holding and investing cash flow while increasing firms financing cash flow, and under-investment impacts FDR through the inverted U-shaped relationship with operating cash flow and U-shaped relationship with firms’ financing cash flow. Our findings hold up well after various robustness tests, providing new implications of firm life circle theory and static trade-off theory in the process of investment efficiency influencing FDR.</div></div>","PeriodicalId":47026,"journal":{"name":"Journal of Behavioral and Experimental Finance","volume":"45 ","pages":"Article 101024"},"PeriodicalIF":4.3,"publicationDate":"2025-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143161408","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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