Oloyede Obagbuwa
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Monitoring intensity, investment inefficiency and institutional shareholders: Evidence from JSE listed companies in South Africa
Oloyede Obagbuwa , Farai Kwenda , Gbenga Wilfred Akinola doi: http://dx.doi.org/10.21511/imfi.18(3).2021.01Investment Management and Financial Innovations Volume 18, 2021 Issue #3 pp. 1-15
Views: 755 Downloads: 370 TO CITE АНОТАЦІЯThis study investigates how variation in monitoring intensity affects the efficiency of firms’ investment decisions in an emerging market in South Africa. The study hypothesis argues that the distraction of institutional shareholders has a statistically significant positive effect on corporate investment inefficiency. Using a more robust Generalized Method of Moments (Sys GMM) estimation approach to analyze data collected for firms listed at the Johannesburg Stock Exchange (JSE) for the period 2004–2019, the results showed that the distraction of institutional shareholders has a positive and statistically significant impact on investment inefficiency. That is, when the attention of institutional shareholders is shifted, the intensity of their monitoring drops, and the executive is involved in investment decisions that are not profitable. This insight has an implication for stakeholders and the value-creating corporate governance mechanism. The study concludes that institutional shareholders must always sustain their monitoring intensity to ensure that corporate decisions are consistent with the firm’s value.
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Green investment in South Africa: A perception of overinvestment or underinvestment in energy and mining firms
Investment Management and Financial Innovations Volume 21, 2024 Issue #1 pp. 229-243
Views: 79 Downloads: 11 TO CITE АНОТАЦІЯThis paper investigates green investments in energy and mining firms in South Africa to determine the efficiency level in terms of overinvestment and underinvestment. The general Richardson residual measurement model is employed, and an enhanced model is created by including variables that influence green investment, such as political connections and pollutant emissions. Data from 17 companies (5 energy and 12 mining) were used because of the significant effects of their operations on the environment over the period between 2015 and 2022. The study findings show that, in comparison to the estimated optimal investment level, South African energy and mining firms are not consistent regarding their investment level. It interplays between underinvestment and overinvestment. However, both firms demonstrated the tendency to green investment inefficiency due to underinvestment recorded in the latter years of the sample period. The study provides understanding as regards green investment levels of energy and mining firms and hence recommends adequate oversight and formulation of environmental policy by the government to ensure green investment efficiency in line with both national and international policies and regulations to facilitate a sustainable environment.
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