Investigating the Moderating Role of Corporate Governance on the Relationship between Product Market Competition and Investment Efficiency: The Role of Over- and Underinvestment

Subject Areas : Corporate governance

Samira Beiranvand ¹ , Foruzan Abyaz ² , Khadijeh Khodabakhshi Parijan ^{3 *}

1 - PhD.Condidate, Department of Accounting , WT.C, Islamic Azad University, Tehran, Iran
2 - PhD.Condidate, Department of Accounting , WT.C, Islamic Azad University, Tehran, Iran
3 - Assistant Prof, Department of Accounting, WT. C, Islamic Azad University, Tehran, Iran

Received: 2025-04-23 Accepted : 2025-07-15 Published : 2025-10-07

Keywords: Product market competition, Investment efficiency, Overinvestment, Underinvestment, Corporate governance,

Abstract :

Objective: In competitive market environments, companies face multiple pressures to innovate and improve efficiency in order to maintain their position. Effective corporate governance, with mechanisms such as a strong board of directors, appropriate ownership structure, and compliance with regulations, plays a vital role in guiding management decisions towards optimizing investments. This study examines the moderating role of corporate governance on the relationship between product market competition and investment efficiency, with special emphasis on the phenomena of over and underinvestment.

Method: The statistical population of this study was all companies listed on the stock exchange during the period 2017-2024. A statistical sample of 150 companies was selected by systematic exclusion. The research method was applied in terms of purpose and post-event in terms of data collection method. Data analysis was performed using panel data and logit regression techniques.

Findings: The results of the study showed that product market competition had a positive and significant relationship with investment efficiency. It was also determined that product market competition had a positive relationship with overinvestment and a significant negative relationship with underinvestment. In examining the moderating role of corporate governance (ownership concentration), it was determined that corporate governance leads to the moderation of the relationship between product market competition and investment efficiency.

Conclusion: The results indicated that corporate governance leads to the strengthening of the positive relationship between product market competition and investment efficiency.