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Evolutionary game simulation of corporate investing and financing behavior from a risk perspective

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Abstract

Risk factors have a significant influence on corporate investing and financing behavior. Based on agency theory, this paper analyzes conflicts of interest that are involved in the process of corporate investing and financing under the influence of risk, and it conducts this analysis using the evolutionary game model for investing and financing behavior. The evolutionary simulation analysis is conducted using the system dynamics method to explore the investing and financing behavior of corporate entities that are influenced by different risks. The results of this analysis show that the risks that impact the debt financing strategies of corporations are usually investment risk and interest rate risk, and that internal governance risk does not appear to change the financing structure of corporate behavior. Risks that impact the excessive investment strategy choices of corporations are mainly investment risk and internal governance risk, while interest rate risk does not appear to have any effect on the excessive investment tendencies of certain managers.

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Acknowledgements

This paper is supported by the fundamental research funds for the central universities (Program No. 2662016QD054).

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Authors and Affiliations

  1. College of Economics and Management, Huazhong Agricultural University, Wuhan, 430070, Hubei, China

    Sicheng Li

  2. School of Management, Wuhan University of Technology, Wuhan, 430070, Hubei, China

    Bin Wang

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  1. Sicheng Li
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Correspondence to Bin Wang.

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Li, S., Wang, B. Evolutionary game simulation of corporate investing and financing behavior from a risk perspective. Cluster Comput 22 (Suppl 3), 5955–5964 (2019). https://doi.org/10.1007/s10586-018-1734-x

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