Research On Investment Behavior And Efficiency In State-owned Listed Companies In China

The investment is one of the major forces driving china's economic growth, but the inefficient investing behaviors, overinvestment and underinvestment, made by enterprises will be harmful to the stable economic growth. According to the overseas research, inefficient investing problem is not just the problem of corporate financial decision. It is largely rooted in inadequate institutional arrangements, such as the level of legal protection of investors, political environment, capital market regulation, administrative intervention, governance mode and company-wide governance structure. Therefore, it may be able to break the inefficient investing problem from a system perspective to study state-owned listed companies'investment problem.China's state-owned listed companies have the following governance characteristics. On one side, state-owned listed companies's two governance characteristics are government intervention and insider control because of the"super"control in administrative and"super-weak"control in ownership. On the other side, the core issue in corporate governance not noly includes the conflicts among shareholders and managers, more conflicts among large shareholders and minority shareholders. At the same time, because of the lack of legal system and supervision, China's state-owned listed companies'governance mechanism is under the major stockholders. Therefore, government intervention, insider control and major stockholders controlling may affect state-owned listed companies'investment decisions. Based on the principal-agent theory, this paper probes the investment behavior and its efficiency of state-owned listed companies deeply and systematically. In order to make a criterion to government behavior and behavior mode of investment under the statue quo of governance in state-owned listed companies, support empirical proof and referenced basis which are much more systemic and more close to the corporate character in transition period. Concretely, the following research has been developed in this paper.Firstly, the thesis investigates the effects of government intervention, compensation regulation and soft debt constraint on overinvestment of free cash flow from the perspective of state-owned property. The research shows that state-owned listed corporation has more serious the problem of over-investment in free cash flow. Government intervention, compensation regulation and soft debt constraint are the main reasons.Secondly, this paper starts from the phenomenon of insider control under administrative intervention in state-owned enterprises'reform, examines the impact of institutional arrangement of insider control rights under executive intervention on overinvestment of free cash flow. We find that, the investment behavior of stated-owned companies which are subject to government intervention is superior to insider control. Although, executive intervention has an incline to pursue non-economic efficiency goal, it also can control insiders'opportunism.Finally, by assessing investment efficiency based on SFA model and constructing path model, this paper mainly studies the path of major stockholders controlling'influence on investment efficiency. The empirical result shows that, major stockholder controlling not only has a positive impact on efficiency of investment, but also has a negative impact on efficiency of investment. Overall efficiency of China's stock market is no efficient. The main reason is that the major stockholder controlling has a negative impact on efficiency of investment through ratio of independent directors and capital structure.The following contents are the main innovation points in this paper:â‘ The thesis investigates the effects of government intervention, compensation regulation and soft debt constraint on overinvestment of free cash flow from the perspective of state-owned property. It is not only to understand the economic consequences caused by company goals and distorted incentives under government intervention, but also to provide important policy implications for the regulation of capital markets.â‘¡This paper examines the impact of institutional arrangement of insider control rights under executive intervention on overinvestment of free cash flow. It not only has an important implication for understanding the economic consequences of insider control under executive intervention, but also provides a useful perspective for reforming government-enterprise relations and addressing the debate on the relationship between governments and markets.â‘¢According to the path of major stockholders controlling'influence on investment efficiency, this paper empirically examines through constructing path analysis model. This can reveal and explore the internal mechanism of controlling major stockholders'influence on investment efficiency and the fundamental reasons of inefficient investing behaviors under major stockholder controlling. At the same time, this paper uses the stochastic frontier analysis to measure state-owned listed companies'investment efficiency, which can make up for the defect of tranditional efficiency measurement method.