The Influencial Factors and Economic Consequences of Corporate Investment Efficiency: A Literature Review

Abstract

With the rapid economic development and fierce competition, the top priority of listed firms will be given to investment efficiency. This paper reviews the relevant literature on the factors affecting the efficiency of corporate investment and its economic consequences. First, this paper presents the definition of corporate investment efficiency and its measurement method. Taking NPV as an example, this research investigates the influencing factors of corporate investment decisions. Then, from the empirical literature and theoretical analysis, this research compiles the studies on the factors influencing corporate investment efficiency or inefficient investment. The factors affecting the efficiency of corporate investment are analyzed and organized at three levels: internal governance or board composition, external corporate governance factors, and external macroenvironmental factors. Finally, this paper also collates studies related to the economic consequences of corporate investment efficiency from the perspectives of corporate value and innovation. The collation of this paper has a very important role in the research related to the efficiency of corporate investment. Overall, we provide relevant suggestions and factors which should be considered when making investment decisions.