A Study On Investment Strategy And Efficiency Of China’s Listed Companies

Our country is new capital market, and there are many faultiness in our country’s capital market, and these faultiness will influence the investment behavior and capital allocation efficiency. China’s listed firms are under the strong control of larger shareholders, while larger shareholders have enough control right to establish the investment decision to meet their purpose and benefit. At the same time, short time stock jobbing transaction is the mainstream in our country’s stock market, and listed firms lost their development direction, and their investment behaviors are short time. Under these condition, the investment behaviors are distorted heavily in some degree, while the low efficiency of capital allocation is caused by inefficiency investment behavior which is prevalent in listed firms.With the development of capital market, the research on the investment behavior and efficiency based on China’s capital market condition and corporate governance structure characteristic become more and more important and imminence. Using qualitative analysis and quantitative analysis method, this paper studies the investment behavior characteristic and capital allocation efficiency of listed firms from the angle of corporate governance, and put forward some useful suggestion. This paper’s work has important theory value and realism significance to the study of listed firms’investment behavior and efficiency, making policy, the durative development of listed firms, and investment decision behavior of investor, etc. Using econometric method as the most important method, this paper studies the structure and distribution of investment behavior, and the influence factors such as financial behavior, governance structure, liquidity level and production market. This paper also studies the overinvestment of free cash flow, and analysis the relationship between investment behavior and corporate value. Except for the first chapter and the second chapter, the study evolves three levels.The first level describes the investment structure and distribution of listed firms. This chapter studies the investment characteristic from several angles, such as investment component, distribution condition, time characteristic, and analysises the investment distribution of different size, year and industry. The result draw three conclusion. First, there is direct ratio correlation between the share of large shareholders and investment size, and the more share large shareholder hold, the more the large shareholder can influence the investment decision of listed companies. Second, there is direct ratio correlation between the share of large shareholders and investment, and the more share large shareholder hold, the more the largest shareholder can influence the investment decision of listed companies. Third, the share of maintance investment is low and the share of new investment for listed companies during2005-2009. With the successive promotion of share-trading reform and arriving of full listing time, the behavior of largest shareholder will have new characteristic, and the investment behavior and efficiency of listed firms will become hot topic.The second level deeply studies the characteristic of investment behavior and efficiency of listed firms from three angles such as the influence factors, the use of free cash flow and investment efficiency. We can draw four conclusions from this chapter. First, there is direct relationship between equity raising and investment level, and equity raising can play direct incentive effect. Second, share structure of listed firms have important influence on investment, and there is direct relationship between the share of largest shareholder and investment size. Third, there is inverse relationship between asset liquidity and investment size. Fourth, the total investment, capital investment, new investment increase with the risk and competent ability, and the more large the risk and competent ability, the larger the investment size.The last level talks about the methods of controlling investment behavior and promoting investment efficiency. These methods include forcing the information disclosure mechanism, strengthing the outside direction and control, perfecting the corporate governance, etc. We can not only build better market environment for listed firms, but also raise the competent ability and development ability of listed firms, optimize investment behavior and investment efficiency. In the last, the performance and market value of listed firms can be raised.The key innovations include: Firstly, from market value index, operating performance index analysis the influence of the enterprise investment behavior do to the Chinese listed company’s market value and performance the influence, and analyzed the listed company investment efficiency of features.Secondly, from product market competition, asset characteristics, equity structure and financing activities these four new factor analysis in the listed company investment behavior, and constructs the comprehensive analysis framework.