Investment Committee Characteristics and Investment Efficiency
This study investigates the association between existence of a board investment committee and that committee’s characteristics and corporate investment efficiency. Using a sample of industrial firms from six Gulf Cooperation Council (GCC) countries over the 2005–2013 period, we find that the existen...
| Main Authors: | , , , |
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| Format: | Journal Article |
| Published: |
2017
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| Online Access: | http://hdl.handle.net/20.500.11937/73925 |
| _version_ | 1848763133940727808 |
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| author | Alhadi, A. Eulaiwi, Baban Taylor, G. Al-Yahyaee, K. |
| author_facet | Alhadi, A. Eulaiwi, Baban Taylor, G. Al-Yahyaee, K. |
| author_sort | Alhadi, A. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | This study investigates the association between existence of a board investment committee and that committee’s characteristics and corporate investment efficiency. Using a sample of industrial firms from six Gulf Cooperation Council (GCC) countries over the 2005–2013 period, we find that the existence of an investment committee reduces both under- and over-investment by these firms. We also find that financial expertise of committee members positively affects firms’ investment efficiency. These findings are consistent with the assertion that a board investment committee assists with the monitoring and control of firms’ investments. We also find that the existence of an investment committee is likely to reduce over- and under-investment in firms with high levels of foreign ownership concentration. The tenets of agency theory suggest that the existence of an investment committee aligns a firm’s investment activities with the objective of shareholder wealth maximization. These results are robust to a battery of additional tests that use alternative measures of investment efficiency and tests relating to self-selection bias and endogeneity. |
| first_indexed | 2025-11-14T10:58:37Z |
| format | Journal Article |
| id | curtin-20.500.11937-73925 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T10:58:37Z |
| publishDate | 2017 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-739252019-06-25T00:19:00Z Investment Committee Characteristics and Investment Efficiency Alhadi, A. Eulaiwi, Baban Taylor, G. Al-Yahyaee, K. This study investigates the association between existence of a board investment committee and that committee’s characteristics and corporate investment efficiency. Using a sample of industrial firms from six Gulf Cooperation Council (GCC) countries over the 2005–2013 period, we find that the existence of an investment committee reduces both under- and over-investment by these firms. We also find that financial expertise of committee members positively affects firms’ investment efficiency. These findings are consistent with the assertion that a board investment committee assists with the monitoring and control of firms’ investments. We also find that the existence of an investment committee is likely to reduce over- and under-investment in firms with high levels of foreign ownership concentration. The tenets of agency theory suggest that the existence of an investment committee aligns a firm’s investment activities with the objective of shareholder wealth maximization. These results are robust to a battery of additional tests that use alternative measures of investment efficiency and tests relating to self-selection bias and endogeneity. 2017 Journal Article http://hdl.handle.net/20.500.11937/73925 restricted |
| spellingShingle | Alhadi, A. Eulaiwi, Baban Taylor, G. Al-Yahyaee, K. Investment Committee Characteristics and Investment Efficiency |
| title | Investment Committee Characteristics and Investment Efficiency |
| title_full | Investment Committee Characteristics and Investment Efficiency |
| title_fullStr | Investment Committee Characteristics and Investment Efficiency |
| title_full_unstemmed | Investment Committee Characteristics and Investment Efficiency |
| title_short | Investment Committee Characteristics and Investment Efficiency |
| title_sort | investment committee characteristics and investment efficiency |
| url | http://hdl.handle.net/20.500.11937/73925 |