The Effect of Debt Maturity on the Relationship between Corporate Governance and Investment Efficiency: Evidence from Thailand

Purpose: This study investigates whether the corporate governance practice (CG) of firms on the Stock Exchange of Thailand (SET) can enhance investment efficiency (InvEff). Additionally, this study explores the interaction effect of debt maturity (DM) on the relationship between CG practice and InvEff. Design/methodology/approach: The study investigated 1,206 firm-year observations of 193 SET-listed firms from 2017 to 2022. The Refinitiv Eikon Datastream provided overall CG in three categories: CSR, management, and shareholders. SETSMART provided additional variable data. Pooled OLS was evaluated using the Pagan LM test. The Hausman test assessed FEM or REM suitability. The Wald test detected endogeneity. Finally, GMM was chosen to address potential endogeneity and produce consistent and unbiased estimates. The findings and conclusions of this study are based on the GMM model. Findings: CG practice produces a positive impact on InvEff. CSR strategy and management improve InvEff. DM strengthens the positive impact of overall CG, CSR, and management practices on InvEff. Similar findings are obtained from a robustness test. Research limitations/implications: The findings enhance the understanding of CG regarding agency theory in developing countries. This study expands CG literature by concentrating on InvEff. The findings should benefit listed firms, policymakers, and investors. However, this study used database CG data, which does not contain all SET firms, and some investigations were not examined in the robustness test. Originality/value: This study casts new light on measuring CG practice, focusing on the impact of CG on InvEff, and investigates the interactive role of DM on the association between CG and InvEff, which is quite scarce and counts as a novelty.