Urbanization Quality And Enterprise Investment Efficiency In China

After the reform and opening up,China’s economy has grown rapidly and urbanization has continued to develop,with local governments playing a major role in advancing the process of urbanization.However,there is a long-running phenomenon that "urban urbanization" is faster than population urbanization in China.The problems are related to China’s unique urbanization development model.A large number of studies show that local governments use monopoly supply and control of land to promote economic growth.,urbanization and increase fiscal revenue.By transferring land,local governments can significantly influence the operation of regional economy and the investment production of enterprises.First of all,land is the necessary production material for enterprises to expand production investment.Scarce land resources will cause enterprises to compete on land and investment in production,which tends to exacerbate the excessive use of internal cash flow caused by information asymmetry and agency issues,which in turn leads to excessive corporate investment.Secondly,low-priced land provides a "cost"subsidy for the production of the company,which reduces the company’s capital cost and encourages the company to increase investment.However,large-scale urbanization requires large amounts of funds and occupies a large number of markets.The pool of funds also exacerbates the external financing constraints of the company and also has an adverse effect on the expansion of investment by enterprises.Finally,the expansion of urbanization in China has exacerbated unemployment.Local governments tend to encourage enterprises to expand production investment to reduce unemployment,which may easily lead to excessive investment.Considering the great differences in regional economic development in China,different local governments have different ways of dealing with employment targets,and the impact on corporate investment may also be different.In order to analyze the impact of urbanization in China on corporate investment efficiency,this paper uses the macro data of land transfer data and employed population from municipality to provincial level from 2003 to 2013,combined with the financial data of China’s A-share listed companies,from free cash flow.From three perspectives,capital cost and labor cost,the impact of local government urbanization on corporate investment efficiency is analyzed.The following conclusions have been drawn:The improvement of the quality of urbanization will help reduce the excessive use of internal cash flow by enterprises and reduce excessive investment,mainly affecting highly dispersed non-state-owned and non-industrial enterprises;External financing constraints,to reduce investment shortages,mainly for non-manufacturing companies and smaller enterprises;but in areas with higher urbanization development quality,manufacturing and non-state-owned enterprises are more affected by labor protection and are more likely to have Insufficient investment.Therefore,it can be seen that the quality of urbanization development in our country still has a certain degree of two-sidedness.It should be based on the development of different regions and industries to formulate corresponding urbanization development strategies and construction steps.