Type of the article: Research Article
This study addresses the critical role of investment efficiency in improving firm performance and firm value in emerging markets, where corporate governance mechanisms remain uneven across firms. Despite extensive research on the determinants of investment efficiency, limited evidence exists on its economic consequences and the conditions under which its benefits are maximized. Therefore, this study aims to examine the impact of investment efficiency on firm performance and firm value, and to investigate the moderating role of corporate governance quality. This study uses panel data from 193 non-financial firms listed on the Stock Exchange of Thailand over the period 2017–2022, covering 1,206 firm-year observations. Investment efficiency is measured based on deviations from an optimal investment level, while firm performance and firm value are proxied by return on assets, return on equity, and Tobin’s Q. Corporate governance quality is measured using Refinitiv governance scores. To address endogeneity, the generalized method of moments is applied. The results indicate that investment efficiency is positively associated with firm performance and firm value. Specifically, investment efficiency significantly improves ROA (β = 0.0035, p < 0.01) and Tobin’s Q (β = 0.0046, p < 0.01). Moreover, corporate governance strengthens these relationships, as shown by the positive interaction between investment efficiency and governance quality for ROA (β = 0.0167, p < 0.01) and firm value (β = 0.0419, p < 0.01). These findings suggest that effective corporate governance enhances the value-creating impact of efficient investment, highlighting the importance of governance in improving firm outcomes in emerging markets.