Property Nature,Separation Of Control Rights And Cash Flow Rights And Corporate Investment

As a form of corporate resource allocation, investment decision reasonable or not directly affects the value of the corporation. In the real world, non-efficient investment behaviors (over-investment and under-investment) are common. Many Western scholars explain corporate investment behavior by agency theory. In China, governments control the vast majority of resources and do most of "players" work not only judges in economic transactions. Therefore, the agency theory of Chinese system background should have a significant difference with the West.First of all, the ultimate controller controlled the listed companies through the pyramid structure, so the main agency problem in the group companies is between the major shareholder and the minority shareholders. Secondly, the Government as the major shareholder controls most of listed companies, often put public objectives such as employment, taxation and others into the business goals, so the conflicts between the state-owned shareholders and small shareholders is different from that in private enterprises. Thirdly, the state-owned banks prefer to lend to the state-owned enterprises rather than private enterprises and have the soft budget constraint on state-owned enterprises, so the state-owned enterprises have the strong debt capability, as for private corporation, the loans discrimination and hard budget constraints limit the debt financing. So in Chinese institutional background, the nature of property rights impact on business investment as a special variable.This paper takes the divergence of control rights and cash flow rights as the variable of agency cost between control shareholders and minority shareholders, takes the property nature of ultimate shareholders as the classification standards, discuss the companies with different property nature have different relationships of corporate investment and agency costs. The results are as follows:the agency cost between large shareholders and minority shareholders is significantly positive relation with corporate investment, after the classification of ultimate controller property rights, the agency cost between control shareholders and minority shareholders in state-owned companies have the positive relation with investment, at the meanwhile, the agency cost in private companies have the insignificant negative relation with investment. After controlled the debt financing constraints, the agency cost have the significant positive relation with investment in unconstraint companies. Furthermore, after dividing the state-owned companies into central government controlled companies (CGCC) and local government controlled companies (LGCC), the agency cost of control shareholders and minority shareholders in CGCC has the insignificant positive relation with investment while the agency cost in LGCC has the significant positive relation with investment. The results means different administrative levels of government have different political objectives, relative to the central government; the motivation intervening in business to expand corporate investment of local government is more intense.This study shows that:in order to improve the efficiency of corporate investment, we should limit governments'intervention to corporate policies, strengthen the independence of bank and improve the efficiency of outside monitor.