The governance Effect of Heterogeneous Debts on Over-investment: Evidence from China

Abstract

This paper sets out to observe the governance effect of the heterogeneous debts on the over-investment behavior by Chinese companies. On this basis, the authors examined the different relationships between heterogeneous debts and over-investment. The study results indicate that various types of debt have different governance effect on over-investment. Trade credit can curb over-investment effectively and bank loans may exacerbate over-investment.