Inflation Expectations And Corporate Investment Behavio

During the normalization period of epidemic prevention and control,the global economic reconstruction and industrial transformation and upgrading,the energy structure adjustment and the green and low-carbon transformation and development,the aging of the population of important supply countries,the rise of anti-globalization and trade protectionism will intensify the tension between the supply and demand of related commodities,and drive the central rise of medium and long-term inflation.Or it will break the long global situation of "low growth,low inflation and low interest rate" since the outbreak of the financial crisis in 2008.Given the universality and volatility of inflation in economic development,enterprise managers,as rational economic people,will make full use of all available information to form an inflation expectation without systematic bias,and formulate development strategies and business plans based on this expectation.In other words,managers tend to predict inflation "prospectively" and make strategic operational arrangements more "proactively" to avoid the adverse economic consequences of actual inflation that may occur in the future.Then,a natural corollary is that inflation expectations will have an impact on corporate investment behavior.Based on this,this paper focuses on how inflation expectations affect the investment behavior of micro-enterprises,and further explores the underlying mechanism from the perspective of "inflation illusion".Financial investment,M&A,and R&D innovation are good perspectives to examine the economic consequences of inflation expectations from the micro level of enterprises.This is because: first,entering the era of normalization of epidemic prevention and control,the global economy continues to be depressed,and various industries have begun to actively or passively accelerate into the stage of transformation and integration.Superior enterprises hope to seize the opportunity to become bigger and stronger,while inferior enterprises are eager to find ways to break the situation.Financial investment,M&A,and R&D innovation,as an important part of the investment expenditure of enterprises,are the key strategies for the survival and development of enterprises,and also an important driving force for the sustainable development of a country’s economy.Second,corporate financial investment,M&A,and R&D innovation are highly uncertain in terms of input and output,and are vulnerable to the impact of the external macro environment.In the current turbulent environment of repeated COVID-19 and geopolitical uncertainty,they can better reflect the economic consequences of changes in inflation expectations.Third,enterprises’ financial investment,M&A and R&D innovation are often planned in advance.It is necessary to determine the development strategy and direction of enterprises according to the prediction of the macroeconomic development situation in advance,which is consistent with the pre-judgment characteristics of inflation expectations.In view of this,this paper attempts to analyze the impact of inflation expectations on corporate investment behavior and its mechanism by taking corporate financial investment,M&A,and R&D innovation as the starting point,so as to establish a transmission mechanism from the macroeconomic environment to the microeconomic entities.First,this paper studies the impact of inflation expectations on corporate financial investment.Moderate investment in financial assets can help enterprises prevent liquidity risk and improve capital utilization.However,when the asset allocation of a large number of physical enterprises gradually tends to financial investment,it will not only cause the disconnection between the real economy and the virtual economy,aggravate the volatility of the financial market,and trigger systemic financial risks,but also greatly damage the economic structure and industrial upgrading process of China,and aggravate the macroeconomic turbulence.Based on this,paying attention to the impact of inflation expectations on the financial trend of entity enterprises will not only help to further explore the influencing factors of the financial trend of entity enterprises from a macro perspective,but also provide a theoretical basis for the Chinese government to innovate and improve macro-control to improve the efficiency of government governance.This paper finds that high inflation expectations will promote non-financial enterprises to expand their current financial activities.The mechanism test shows that due to the "inflation illusion" of investors,the rise of inflation expectations will lead to the undervaluation of the equity value of enterprises,which will encourage enterprises to increase the investment in financial assets to repair the valuation.For enterprises with lower institutional shareholding ratio and higher leverage ratio,the "inflation illusion" leads to a greater degree of undervaluation of enterprise equity value,and inflation expectations have a more significant role in promoting the trend of enterprise financialization.Further research found that the main motivation for enterprises to increase financial asset investment under inflation expectations is profit pursuit rather than preventive savings,and higher information transparency and marketization can effectively curb the trend of enterprise financialization by easing the "inflation illusion" of investors.The research in this paper shows that improving the information disclosure system,encouraging institutional investors to participate in the market and promoting industrial upgrading to narrow the profit gap of financial entities can help promote the high-quality development of financial services to the real economy.Secondly,this paper studies the impact of inflation expectations on M&A.With the repeated overlapping of the epidemic and the intensification of marginal political conflicts,the global economy continues to be depressed,and various industries have begun to actively or passively accelerate into the stage of transformation and integration.The advantageous enterprises hope to seize the opportunity to become bigger and stronger,while the inferior enterprises are eager to seek ways to break the situation.M&A transactions have become an important strategy for the survival and development of enterprises.Therefore,how to improve the quality of enterprise M&A,promote industry integration and industrial upgrading has important theoretical value and practical significance for policy makers and listed companies.In view of this,this paper takes the inflation expectation as the starting point,and examines its impact on corporate M&A and its mechanism,with a view to exploring more effective ways to improve the quality of corporate M&A.This paper finds that high inflation expectations will significantly increase the possibility and frequency of M&A.The mechanism test shows that mispricing is part of the intermediary that inflation expectations affect the M&A and restructuring behavior of enterprises.Due to the "inflation illusion" of investors,the rise of inflation expectations will lead to the undervaluation of the equity value of enterprises,thus prompting enterprises to initiate M&A transactions to repair the valuation.Further research found that the main motivation for enterprises to initiate M&A transactions under inflation expectations is to carry out market value management rather than pursue "synergy",which is embodied in that inflation expectations will reduce the probability of successful completion of M&A,enhance the motivation of enterprises to initiate non-industrial M&A transactions,bring about the improvement of market performance and the decline of business performance,and increase the possibility of enterprises to accrue goodwill impairment within two years after M&A.In addition,the launch of the Shanghai and Hong Kong stock market trading interconnection mechanism pilot and the implementation of the margin trading system can effectively inhibit the market value management behavior of enterprises by improving the pricing efficiency of the capital market.The research in this paper showsthat further accelerating the opening of the capital market,expanding the pilot scope of margin trading and strengthening the supervision of valuation speculation in the M&A market will help promote the healthy development of the M&A and the high-quality development of the real economy.Finally,this paper also examines the relationship between inflation expectations and enterprise R&D innovation.Against the background of the repeated overlapping of the epidemic and the intensification of marginal political conflicts,the international situation has accelerated changes,and the technological competition and mutual blockade between countries have gradually escalated.However,the "bottleneck" situation of China’s key technologies is still serious,and the realization of technical self-sufficiency in the short term is still facing challenges,the risk of supply chain disruption is increasing,and the development driven by independent innovation has a long way to go.It is true that the improvement of innovation capability needs the efforts of enterprises themselves,but innovation cannot be carried out in a vacuum,and the impact of external environment on their enterprise innovation cannot be ignored.In view of this,this paper further explores the relationship between inflation expectations and R&D innovation of real enterprises,which is not only helpful to improve the technological innovation ability of enterprises,but also crucial to improve the national independent innovation ability and build an innovation power.This study found that inflation expectations and enterprise R&D innovation as a whole show an inverted Ushaped relationship.The mechanism test shows that with the increase of inflation expectations,on the one hand,the sum of the marginal utility of inflation expectations on the reduction of stock valuation and the marginal utility of R&D innovation on the improvement of stock valuation gradually decreases;On the other hand,the total effect of inflation expectations and R&D innovation on the risk of stock price collapse has gradually increased from negative to positive,further verifying the inverted U-shaped relationship between inflation expectations and R&D innovation.Further research found that the main motivation of enterprises to increase innovation investment under inflation expectations is strategic innovation rather than substantive innovation,and better internal control and higher information transparency can effectively inhibit the strategic innovation activities of enterprises by mitigating the opportunistic behavior of managers.The research in this paper shows that building a perfect internal control system,improving the quality of enterprise information disclosure and formulating a performance-oriented management compensation incentive plan can help promote enterprise technological innovation and promote high-quality economic development.The innovation of this paper is mainly reflected in the following four aspects: First,it enriches the research on the economic consequences of inflation expectations.First of all,it enriches the research on the expected economic consequences of inflation.The existing literature focuses on the total amount of capital expenditure or capital structure of enterprises,and has not yet thoroughly studied the impact of inflation expectations on the specific investment behavior of enterprises.From the perspective of financial investment,M&A and R&D innovation,this paper systematically studies the impact of inflation expectations on the internal and external investment behavior of microenterprises and its internal mechanism.The research finds that: first,inflation expectations will lead enterprises to increase investment in financial assets;Second,inflation expectations will enhance the motivation of enterprises to initiate M&A transactions;Third,with the rise of inflation expectations,the investment in R&D and innovation of enterprises increased,but when the inflation expectations reached the critical value,the R&D and innovation of enterprises began to decline.The above research conclusion is the expansion and supplement of the existing literature.Secondly,it enriches the research on the influencing factors of enterprise investment behavior.In order to deeply analyze the behavior of micro-enterprises,the macro-economic environment is a factor that cannot be ignored.The research on the macro-influencing factors of micro-enterprises’ investment behavior mainly includes three categories: macro-economy,macro-policy and institutional culture.However,the change of macroeconomic cycle is not necessarily related to the level of inflation,and inflation expectations are not equivalent to actual inflation.Therefore,this paper focuses on the impact of inflation expectations on corporate investment behavior,and explores the "invisible" impact of macroeconomic environment on real economic behavior from a more micro perspective,which is an important supplement to the existing literature.Thirdly,it reveals the transmission mechanism from macro-economic environment to micro-enterprise behavior.The existing research mainly focuses on macroeconomic uncertainty,changes in the price of physical assets,access to external financing of enterprises,and inflation policy management to analyze the mechanism of the impact of inflation expectations on enterprise asset allocation,but mostly stays at the level of theoretical analysis.Based on the theory of "inflation illusion",this paper provides model support and empirical evidence,and finds that rising inflation expectations may lead to the undervaluation of the equity value of enterprises,thus promoting enterprises to increase investment in financial assets and launch M&A to boost the equity value.In addition,from the perspective of stock mispricing and the risk of stock price collapse,this paper uses the marginal utility analysis method to further confirm the inverted Ushaped relationship between inflation expectations and enterprise innovation investment,and opens the "black box" where the macroeconomic environment affects the investment behavior of micro-enterprises.Finally,it broadens the research vision of the motivation of enterprises to adjust investment decisions.This paper finds that: first,when inflation expectations rise,enterprises increase their investment in financial assets mainly because of profit chasing motivation rather than "reservoir" motivation.Second,when inflation expectations rise,M&A are aimed at market value management rather than pursuing "synergy";Third,when inflation expectations rise,enterprises mainly carry out strategic innovation rather than substantive innovation.The above research conclusions provide theoretical and empirical basis for the government to innovate and improve macro-control,improve government governance efficiency,and promote stable economic growth and high-quality development...