You can manage bookmarks using lists, please log in to your user account for this.
Media type:
E-Article
Title:
Strategic deviation and investment inefficiency
Contributor:
Ranasinghe, Dinithi;
Habib, Ahsan
imprint:
SAGE Publications, 2023
Published in:Australian Journal of Management
Language:
English
DOI:
10.1177/03128962231152764
ISSN:
0312-8962;
1327-2020
Origination:
Footnote:
Description:
<jats:p> We examine the association between strategic deviation and investment inefficiency. We conceptualize strategic deviation as the extent to which the pattern of a firm’s resource allocation deviates from its industry peers. We posit that firms pursuing deviant strategies are prone to increased information asymmetry and hence, are able to engage in self-serving behaviour as manifested in inefficient investments. Our results suggest that deviant firms have sub-optimal investments. A battery of robustness tests validates our findings. We further provide evidence to suggest that weaker monitoring, high product market competition and a low-quality information environment moderate the relation between strategic deviation and investment inefficiency. </jats:p><jats:sec><jats:title>JEL Classification:</jats:title><jats:p> M41, G41 </jats:p></jats:sec>