The impact of investment efficiency on firm value and moderating role of institutional ownership and board independence

Salehi, Mahdi; Zimon, Grzegorz; Arianpoor, Arash; Gholezoo, Fatemeh Eidi Article The impact of investment efficiency on firm value and moderating role of institutional ownership and board independence Journal of Risk and Financial Management Provided in Cooperation with: MDPI – Multidisciplinary Digital Publishing Institute, Basel Suggested Citation: Salehi, Mahdi; Zimon, Grzegorz; Arianpoor, Arash; Gholezoo, Fatemeh Eidi (2022) : The impact of investment efficiency on firm value and moderating role of institutional ownership and board independence, Journal of Risk and Financial Management, ISSN 1911-8074, MDPI, Basel, Vol. 15, Iss. 4, pp. 1-13, https://doi.org/10.3390/jrfm15040170 This Version is available at: https://hdl.handle.net/10419/274692 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/   Citation: Salehi, Mahdi, Grzegorz Zimon, Arash Arianpoor, and Fatemeh Eidi Gholezoo. 2022. The Impact of Investment Efficiency on Firm Value and Moderating Role of Institutional Ownership and Board Independence. Journal of Risk and Financial Management 15: 170. https://doi.org/10.3390/ jrfm15040170 Academic Editors: Cristina Raluca Gh. Popescu and Khaled Hussainey Received: 24 January 2022 Accepted: 28 March 2022 Published: 7 April 2022 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Copyright: © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). Journal of Risk and Financial Management Article The Impact of Investment Efficiency on Firm Value and Moderating Role of Institutional Ownership and Board Independence Mahdi Salehi 1,* , Grzegorz Zimon 2,* , Arash Arianpoor 3and Fatemeh Eidi Gholezoo 3 1Department of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad 9177948974, Iran 2Department of Finance, Banking, and Accountancy, The Faculty of Management, Rzeszow University of Technology, 35-959 Rzeszow, Poland 3Department of Accounting, Attar Institute of Higher Education, Mashhad 9177939579, Iran; [email protected] (A.A.); [email protected] (F.E.G.) *Correspondence: [email protected] (M.S.); [email protected] (G.Z.) Abstract: This study investigates the impact of investment efficiency on firm value with a moderating role of institutional ownership and board independence for companies listed on the Tehran Stock Exchange (TSE). The information from 177 companies in 2014–2021 was examined. Tobin’s Q is a common measure for firm value, and it is a market-based measure and provides a good tool of comparison. The results show that investment efficiency has an impact on firm value. In addition, institutional ownership and board independence moderate this impact. There is a gap between the impact of investment efficiency on firm value and the moderating role of institutional ownership and board independence. This gap creates an opportunity for carrying out in-depth research on those variables. Since the impact of investment efficiency on firm value emphasizing the role of institutional ownership and board independence has not been studied, the study’s findings can show the importance and necessity of this study and fill the gap in this field. Keywords: firm value; investment efficiency; institutional ownership; board independence 1. Introduction Valuation is a common feature of all financial activities and plays a significant role in optimal capital allocation. The valuation of companies is one of many countries’ most essential and most complex economic concepts. In developed and developing countries with advanced capital markets, the value of companies is determined by investment banks and investment consultants using specific standards for each industry. Determining the value of a firm and identifying the factors affecting it in the capital markets has always been a challenging topic for investors and financial analysts, and they try to determine the factors affecting the value of the company in reality. One of the critical factors for measuring the value of any firm is investment efficiency. Investors’ motive to invest in the stock market is to get dividends or capital gain and company ownership. Prior to investment, investors will take stock returns they will accept and firm value into account. Although higher stock price equals higher corporate value and the maximum firm value will increase profit for shareholders (Husnan 2012), the agency problem is an obstacle to achieving the goal (Suhadak et al. 2019). Due to the information asymmetry between owners and managers and by Signaling theory, accounting can be defined as a mechanism for the transfer of relevant and valuable information from the inside of the organization to the outside of it, which results in signaling about competitive advantage, performance, and value of the company (Gumanti 2011) and lead to better decision-making by investors (Vu 2020). J. Risk Financial Manag. 2022,15, 170. https://doi.org/10.3390/jrfm15040170 https://www.mdpi.com/journal/jrfm J. Risk Financial Manag. 2022,15, 170 2 of 13 Furthermore, improving investment efficiency minimizes investment distortion. Since all projects with a positive net present value are funded in a perfect market, they increase the company’s value (Stein 2003). In addition, an under-invested firm with a CEO who has a higher level of managerial optimism can improve the firm’s investment efficiency by reducing the degree of investment, which increases the firm’s value. However, when companies intend to overinvest, there is insufficient evidence to show that a company with a lower level of CEO optimism can effectively improve its investment efficiency by reducing overinvestment and increasing its value (Chen and Lin 2013). In the real world, where micro-investors and institutional investors do not have the same information, the investment efficiency may be distorted by limiting companies’ ability to finance a potential project or selecting an inferior project or expropriating resources by managers (Stein 2003). When a distorted investment reduces the efficiency of a firm’s investment, the firm’s value may be affected by the managerial perspective (Chen and Lin 2013). Thus, the structure of the board and how firms are governed may distress financial performance in various ways and can even lead to corporate disaster (Majeed et al. 2020). This structure can manage the agency problems between shareholders and top management (Hermalin and Michael 1991). By changing management, a company is likely to improve the company’s financial performance, and coherent board decisions also affect corporate governance. As a result, the firm’s board structure can affect the firm’s financial performance (Majeed et al. 2020). A strong board of directors can increase company transparency, leading to a growing reputation and reducing the asymmetric information gap among shareholders (Lokuwaduge and Heenetigala 2017). Stock prices respond to variables such as board independence, and in major economies, regulations are in place to improve the independence and qualification of board members (Yermack 2006). In Iran, issues related to creating a competitive environment and eliminating monopolies in the Iranian economy are controversial. The implementation of No. 44 of the Constitution on privatization and the relative change in the government’s approach to the economy changed the ownership structure of companies. In emerging markets and in developing countries such as Iran, which has its own ownership structure, economic status, legal system, government policies, culture, and especially its corporate governance system and is facing economic sanctions, the norms in it, especially corporate governance issues, can be different from other countries and have different results on financial performance and firm’s value (Arianpoor 2019), which is a reason for conducting the present study. Various corporate governance mechanisms, such as the composition of the board of directors and ownership structures, can protect the interests of shareholders during the corporate decision-making process (Ashfaq and Rui 2019). Institutional ownership can also address agency problems because of its ability to be advantageous, economical, and diversified (Habib et al. 2015). Based on previous studies, it can be argued that there is a gap in the impact of investment efficiency on company value and the moderating role of institutional ownership and board independence. This discrepancy creates an opportunity for conducting an in-depth study on those variables. Since the impact of investment efficiency on firm value with an emphasis on the role of institutional ownership and board independence has not been studied, the findings of this research can show the importance and necessity of this study, and so this research can fill a research gap in this field. Given the importance of investment efficiency and a company’s financial performance in the development of the Iranian economy, this study can help investors in financial analysis and identify the investment behavior of companies in the Iranian economic environment. Moreover, by allowing the country’s economic sector policymakers, a practical step can be taken to strengthen the country’s economy. In the following sections, the literature review and development of hypotheses are explained first. The research methodology is described in the third section. Then, the research findings are presented in the fourth section. Finally, the discussion and conclusion are presented. J. Risk Financial Manag. 2022,15, 170 3 of 13 2. Literature Review and Development of Hypotheses One of the main goals of economic policies and decisions of countries is economic development, and efficient investment has an essential impact on sustainable economic growth and development (Hall and Lerner 2010). On the other hand, competitiveness is a central issue considered for achieving optimal economic growth and sustainable development. Competitive power is one of the characteristics of a successful company. Market competition is an influential factor in corporate investment and financial performance that can lead to increased investment and business efficiency and affects corporate value and agency costs (Nugroho and Stoffers 2020). The agency problem is derived from the separation between corporate ownership and corporate management, and it is an obstacle to achieving the goal. Professional managers are responsible for running most large companies, and they feel they have the authority to run companies without taking shareholder’s interests into account (Suhadak et al. 2019). Since the competitive environment plays an important informational role, a strong competitive environment creates an effective corporate governance culture and leads to improved oversight of management decisions about investment and efficiency. This can be accompanied by increased managerial efficiency and transparency in decision making and improves their level of accountability, which reduces the risk of incorrect investment decisions (Paniagua et al. 2018). Under competition, managers are encouraged to carry out their duties in maintaining the company’s sustainability (Alimov 2014). When stock price information improves, capital allocation is done more efficiently in companies with more market power, increasing the company’s investment efficiency and financial performance (Peress 2010). Thus, according to the presented theoretical foundations, Hypothesis 1 is presented as follows: Hypothesis 1 (H1). Investment efficiency has an impact on firm value. On the other hand, corporate governance includes various types of agreements, organizational mechanisms, and procedures for balancing the power and responsibility of company shareholders, management, board of directors, and employees (Zafar et al. 2008), and competition plays a role in corporate governance, in which market competition increases investment and a company’s financial performance through management discipline and strengthens corporate governance (Laksmana and Yang 2015). Corporate governance occurs mainly through internal mechanisms such as ownership structure (Mnasri and Ellouze 2015). It is one of the most critical factors affecting the proper implementation of corporate governance and increases the reliability of corporate activities and management policies regarding investment and protecting stakeholders’ interests (Chen 2013). In today’s world, rapid and continuous changes occur in the economic environment, resulting in intense competition in the global economy. Since competitiveness provides economic success in various industries, it has increased attention. Institutional ownership has a crucial supervisory role in reducing agency costs, controlling the directors, and improving current financial performance and investment efficiency (Rashed et al. 2018) and could pressure managers into a short-term focus (Bushee 2001). Therefore, Hypothesis 2 is presented as follows: Hypothesis 2 (H2). Institutional ownership moderates the impact of investment efficiency on firm value. Another central corporate governance mechanism is independent directors who might increase or reduce the firm performance. Independent directors are one of the primary debates in corporate governance concerns, and they can control top management and reduce agency problems, particularly the problem of information asymmetry. Monks and Minow (2004) showed that independent directors play an important role in influencing firm J. Risk Financial Manag. 2022,15, 170 4 of 13 performance and are likely to protect stakeholders against managerial self-serving behavior from an agency theory perspective. Belkhir (2009) showed that independent directors could reduce the risk of moral risks through an oversight role. These directors should mediate the conflict between minority and majority shareholders and improve managers’ performance through the monitoring role of managers, which ultimately leads to improved company performance (De Andres et al. 2005). However, the literature in emerging markets is mixed concerning the impact of independent directors on firm performance (e.g., Black et al. 2012;Mahadeo et al. 2012; Marashdeh 2014;Ramdani and Witteloostuijn 2010). Although different studies show mixed results on the relationship between board independence and firm performance, the evidence supports independent directors’ impact on firm performance (Abdullah 2004). Independent managers are motivated to perform their monitoring duties and do not collude with CEOs because they are more independent and more likely to protect their reputation in the external market (Fama 1980;Fama and Jensen 1983). In addition, due to information asymmetry between managers and investors, managers tend to make short-term decisions when the capital market is under pressure to increase investment value and stock prices and avoid buying stocks (Salehi et al. 2021). Because the manager attempts to use the investment made to distort the financial statements presented to the stock market to increase the stock price (Nyman 2005), the board’s independence significantly increases the company’s risk, which can also affect firm value (Zhang et al. 2018). Based on the above discussion, Hypothesis 3 is presented as follows: Hypothesis 3 (H3). Board independence moderates the effect of investment efficiency and firm value. 3. Research Methodology The statistical population of this paper is all listed firms on the Tehran Stock Exchange. This paper assesses the listed firms for 8 years, from 2014 to 2021. In Iran, the guidelines of internal controls, the audit committee, and internal audit activity have been used since nearly 2014. Therefore, the beginning of the research period, 2014, was considered to access more appropriate information. Moreover, for the present research, the required information is available until 2021. In this paper, the firms under study were selected based on the following criteria: 1. They should not be affiliated with investment firms, financial intermediaries, holdings, banks, and leasing; and, 2. They should have a change in the fiscal year or a change in the activity. A total of 177 companies were selected to test the hypotheses according to the mentioned criteria. Model and Variables under Study for Hypotheses Testing Equation (1) was used to test Hypothesis 1, and Equation (2) tested Hypotheses 2 and 3. Valueit =β0+β1INVit +β2SIZEit +β3LEVit +β4ROAit + End Year + Year + Industry + εit (1) Valueit =β0+β1INVit +β2INSOWNi,t +β3BOARDit +β4INSOWNi,t ×INVit +β5BOARDit ×INVit +β6SIZEit +β7LEVit +β8ROAit + End Year + Year + Industry + εit (2) The dependent variable: Value it : Tobin’s Q is a common measure for firm value. This measure is market-based and is considered a principal dependent variable. It has a forward-looking nature and can capture the company’s value (Gerged et al. 2021). Tobin’s Q is calculated as the ratio of total assets minus the book value of equity plus the market value of equity to total assets. This measure performs better than other accounting ratios and is less affected by accounting practices (Banos-Caballero et al. 2014). It also considers firm risk based on the company’s J. Risk Financial Manag. 2022,15, 170 5 of 13 capital market valuation (Smirlock et al. 1984). However, the use of this measure might be inflated by underinvestment if companies have access to debt financing (Dybvig and Warachka 2015;Kose and Litov 2010). Since this measure considers the market value of companies, it provides a good comparison tool (Abdi et al. 2020;Xie et al. 2019). Independent variable: INV i,t is the investment efficiency. According to Biddle et al. (2009) and Houcine (2017), this study used Equation (3) to calculate investment efficiency. Investment efficiency is a company undertaking project with a positive net present value under no market frictions. Underinvestment and overinvestment show investment inefficiency. Underinvestment represents passing up investment opportunities with a positive net present value, while overinvestment represents investing in projects with negative value (Houcine 2017). INVi,t+1=β0+β1salesi,t +εi,t+1(3) INV i,t+1 is the total investment. It is proxied by the difference between capital expenditures and asset sales for firm i at year t, scaled by capital stock at the beginning of the period. Sales i,t is the change in sales from year t − 1 to year t for firm i scaled by prior sales. εi,t+1 is residuals raised from Equation (3) to proxy for investment inefficiency for firm i at year t + 1. The reason for using the model is that according to the neo-classical framework (Hayashi 1982), the marginal Q ratio should describe solely corporate investment when markets are perfect (Houcine 2017). However, as it is difficult to build the Q ratio, sales growth is a proxy for investment opportunities (Biddle et al. 2009). Unlike the Q ratio, sales growth has no theoretical basis as a proxy for investment opportunities. Nonetheless, it can be justified by the following intuition: an increase in sales indicates a future increase in demand for a company’s products (Morck et al. 1990), and to meet the growing demand, increasing production facilities may be necessary, and investment is needed to achieve this expansion (Houcine 2013). In Equation (3), the residuals are used as a firm-specific proxy for investment inefficiency because it shows the deviation of the company’s actual investment level from the expected investment. The value of this deviation indicates an inverse indicator of investment efficiency. Positive residuals or positive deviation from expected investment indicates over-investing, and negative residuals indicate under-investing. Investment efficiency is measured as the absolute value of this error component multiplied by a negative one. Therefore, the larger the amount, the greater the investment efficiency (Richardson 2006). Modifier variables: INSOWN i,t : Institutional ownership is measured by the percentage of shares held by an institutional owner (Alqatamin et al. 2017;Rashed et al. 2018). Board i,t : The number of unaffiliated independent boards divided by the total number of board members (Bhagat and Bolton 2019). Control variables: SIZE i,t : Firm size is calculated as the natural logarithm of total assets. Several previous studies have used firm size (Al-Matari et al. 2012;Cassar and Holmes 2003). The firm size is likely to affect corporate performance positively. The log of total assets calculates this variable. The logarithm mitigates heteroscedasticity problems (Aliani and Zarai 2012). LEV i,t : Leverage is calculated as total debt divided by the total assets. The relationship between leverage and corporate performance is complicated. A positive impact on corporate performance might occur due to lenders’ monitoring (Saidat et al. 2019). Leverage is used as a proxy for financial risk (Shahwan 2015). ROA i,t : Return on assets is defined as the net profit divided by the total assets. Companies with higher ROA are expected to perform better and riskless (Akta¸s and Unal 2015). A high level of profitability ratios means a low level of financial liquidity. In turn, the liquidity ratios are at a high level (Banos-Caballero et al. 2014;Zimon and Zimon 2019; Zimon et al. 2022). EndYear is the control variable of the financial year-end. If the end of financial year-end of the firm in March, it is 1, otherwise, 0. J. Risk Financial Manag. 2022,15, 170 6 of 13 4. Empirical Results 4.1. Data on Descriptive Statistics Descriptive statistics of the main variables of this research are presented in Table 1. Tobin’s Q can be interpreted as a score above 1, meaning that the firm is creating value and a score below 1, meaning that the firm is destroying wealth. The mean value variable (Tobin’s Q) in this study is 2.573, which shows that the companies create value. Table 1. Descriptive statistics of main variables. Variable Mean Standard Deviation Minimum Maximum Value 2.573 2.310 0.515 20.758 INV −0.036 0.689 −0.618 7.974 SIZE 28.231 1.558 24.133 34.579 LEV 0.554 0.216 0.013 1.567 ROA 0.134 0.153 −0.404 0.830 INSOWN 0.602 0.271 0.000 0.989 BOARD 0.670 0.186 0.200 1.000 Resource: Research findings. 4.2. Data Analysis and Main Results Table 2shows the correlation analysis of research variables. The results show a positive correlation between investment efficiency and a firm value at the 99% confidence level (coefficient: 0.001). Table 2. Correlation analysis of research variables. Value INV SIZE LEV ROA INSOWN BOARD Value 1 INV 0.001 *** 1 SIZE 0.226 ** 0.336 ** 1 LEV −0.283 ** 0.021 0.031 1 ROA 0.130 ** 0.043 * 0.228 ** −0.097 *** 1 INSOWN 0.116 ** −0.011 0.131 ** 0.219 ** 0.162 ** 1 BOARD 0.009 ** 0.211 * 0.021 −0.004 *** 0.021 * 0.043 * 1 *, **, and *** indicate statistical significance at the 10%, 5%, and 1% levels, respectively. Resource: Research findings. This study used the Durbin and Wu–Hausman test to test endogeneity. The results of this test for research equations are presented in Table 3. Since the p-value is more than 0.05, there is no endogeneity. Table 3. Results of Durbin–Wu–Hausman test. Equation Test χ2 Statistic p-Value Result (1) Durbin χ2 = 0.142 0.791 H0 is not rejected (there is no endogeneity) Wu–Hausman F = 0.173 0.724 H0 is not rejected (there is no endogeneity) (2) Durbin χ2 = 0.788 0.274 H0 is not rejected (there is no endogeneity) Wu–Hausman F = 0.963 0.298 H0 is not rejected (there is no endogeneity) Resource: Research findings. According to Table 4, based on Equation (1), the investment efficiency has a positive and significant effect on the firm value with 99% confidence (sig < 0.01 and coefficient = 0.298). Thus, Hypothesis 1 is confirmed. Among the control variables in Equation (1), the leverage J. Risk Financial Manag. 2022,15, 170 7 of 13 has a negative effect on firm value (sig < 0.01 and coefficient = − 0.321) while firm size has a positive effect on firm value (sig < 0.01 and coefficient = 0.267). Table 4. GLS for the impact of investment efficiency, institutional ownership, and board independence on firm value. Dependent Variable: Firm Value (Valuei,t) Equation (1): Coefficient (t-Stat.) Equation (2): Coefficient (t-Stat.) INVi,t 0.298 *** (4.210) 0.432 *** (3.870) INSOWNi,t 0.301 (0.830) BOARDi,t 0.220 (0.980) INSOWNi,t ×INVi,t 0.120 ** (2.210) BOARDi,t ×INVi,t 0.712 ** (2.150) SIZEi,t 0.267 *** (6.750) 0.470 *** (4.320) LEVi,t −0.321 *** (−3.110) −0.198 *** (−3.980) ROAi,t 0.225 (1.120) 0.065 (1.130) _cons 2.341 *** (4.220) 2.320 *** (5.170) END YEAR fixed effect Yes Yes YEAR fixed effect Yes Yes INDUSTRY fixed effect Yes Yes N 1416 1416 χ2statistic 489.27 (0.000) 460.62 (0.000) R20.564 0.551 Adjusted R20.558 0.548 Durbin-Watson statistic 1.867 1.851 ** and *** indicate statistical significance at the 5%, and 1% levels, respectively. Note for Equations (1) and (2): Based on the Levin–Lin–Chu unit-root test, the findings show that all variables are stationary. F-Limer (Chow) results show that at the 95% confidence level, the hypothesis of panel data was accepted. Consequently, the Hausman test was used for selecting random or fixed-effects models. The results of the Hausman test show that the fixed effects method should be used for hypothesis testing. The Durbin–Watson statistics show no severe autocorrelation of the error term. The results indicate there was no variance heterogeneity. Based on the results of the Wooldridge test, there was autocorrelation in the research model. The GLS test was used to estimate the model’s coefficients to deal with the issue and the problem of variance heterogeneity. Resource: Research findings. A modified multiple regression method was used to investigate the moderating role of institutional ownership and board independence. According to Equation (2) in Table 4, institutional ownership moderates the relationship between investment efficiency and firm value (sig < 0.05 and Coefficient = 0.120). Therefore, Hypothesis 2 is also confirmed. The board independence positively affects the relationship between investment efficiency and firm value (sig < 0.05 and coefficient = 0.712), confirming Hypothesis 3. According to Equation (2), the leverage has a negative effect on the firm value (sig < 0.01 and coefficient = − 0.198), while firm size has a positive effect on firm value (sig < 0.01 and Coefficient = 0.470). 4.3. Additional Analysis Table 5shows the statistical results of testing the hypotheses based on the robust regression. According to robust regression, the investment efficiency has a positive and significant effect on the firm value, and the size of this effect is 0.410 (sig < 0.01). In addition, leverage has a negative effect on firm value (sig < 0.01 and coefficient = − 0.190) and firm size has a positive effect on firm value (sig < 0.01 and coefficient = 0.460). According to Equation (2), institutional ownership and board independence have a moderating role in the relationship between investment efficiency and firm value. The effect of institutional ownership on the relationship between investment efficiency and firm value is 0.155 (sig < 0.01). The size of the effect of board independence on the relationship between investment efficiency and firm value is 0.433 (sig < 0.05). Therefore, the results of this test are consistent with the results of GLS. The summary of statistical results of Equations (1) and (2) tests based on t + 1 test (value it+1 ) is presented in Table 6. According to Equation (1), the investment efficiency has a positive and significant effect on firm value (sig < 0.05 and coefficient = 0.321). Among the control variables in Equation (1), the leverage has a negative effect on firm value J. Risk Financial Manag. 2022,15, 170 8 of 13 (sig < 0.05 and coefficient = − 0.196), while firm size (sig < 0.01 and coefficient = 0.220) and ROA (sig < 0.1 and coefficient = 0.425) have a positive effect on firm value. According to Equation (2) in Table 6, the institutional ownership moderates the relationship between investment efficiency and firm value (sig < 0.05 and coefficient = 0.345). The board independence also has a positive effect on the relationship between investment efficiency and firm value (sig < 0.05 and coefficient = 0.434). Leverage has a negative effect on firm value (sig < 0.05 and coefficient = − 0.233), while firm size (sig < 0.01 and coefficient = 0.318) and ROA (sig < 0.1 and coefficient = 0.322) have a positive effect on firm value. Table 5. Robust regression for the impact of investment efficiency, institutional ownership, and board independence on firm value. Dependent Variable: Firm Value (Valuei,t) Equation (1): Coefficient (t-Stat.) Equation (2): Coefficient (t-Stat.) INVi,t 0.410 *** (4.720) 0.287 *** (3.430) INSOWNi,t 0.098 (0.260) BOARDi,t 0.142 (1.100) INSOWNi,t ×INVi,t 0.155 *** (4.220) BOARDi,t ×INVi,t 0.433 ** (2.240) SIZEi,t 0.460 *** (4.020) 0.755 *** (5.980) LEVi,t −0.190 *** (−3.210) −0.221 *** (−4.150) ROAi,t 0.114 (1.120) 0.080 (1.220) _cons 4.080 *** (4.160) 3.592 *** (7.130) END YEAR fixed effect Yes Yes YEAR fixed effect Yes Yes INDUSTRY fixed effect Yes Yes N 1416 1416 χ2statistic 185.65 (0.000) 210.67 (0.000) R20.518 0.533 Adjusted R20.498 0.529 Durbin–Watson statistic 1.764 1.816 ** and *** indicate statistical significance at the 5%, and 1% levels, respectively. Resource: Research findings. Table 6. t + 1 regression for the impact of investment efficiency, institutional ownership, and board independence on firm value. Dependent Variable: Firm Value (Valuei,t+1) Equation (1): Coefficient (t-Stat.) Equation (2): Coefficient (t-Stat.) INVi,t 0.321 ** (2.210) 0.321 ** (2.120) INSOWNi,t 0.098 *** (3.320) BOARDi,t 0.324 ** (2.270) INSOWNi,t ×INVi,t 0.345 ** (2.110) BOARDi,t ×INVi,t 0.434 ** (2.150) SIZEi,t 0.220 *** (4.213) 0.318 *** (5.321) LEVi,t −0.196 * (−1.880) −0.233 ** (−2.150) ROAi,t 0.425 * (1.880) 0.322 * (1.920) _cons 2.326 *** (4.120) 3.246 *** (5.320) END YEAR fixed effect Yes Yes YEAR fixed effect Yes Yes INDUSTRY fixed effect Yes Yes N 1416 1416 χ2statistic 354.22 (0.000) 429.61 (0.000) R20.423 0.435 Adjusted R20.402 0.427 Durbin-Watson statistic 1.825 1.812 *, **, and *** indicate statistical significance at the 10%, 5%, and 1% levels, respectively. Resource: Research findings.