Over-Investment In Listed Companies And Debt Governance

In recent years, Chinese economy has maintained rapid growth. The investment play a major role in the development of economy. With the rapid growth of investment, many industries and regions have emerged to over-investment phenomenon because of the limited of sources and consumer demand. Because of over-investment, a flood of capital precipitates at some realms with excess production ability and poor profit ability. Over-investment also reduces the ability of absorbing labor force in economy growth, restricting the development of economy, environment and society.The investment decision-making is the starting point of finance management. Investment decision-making plays an important part in the growth of company and future cash flow, and has a impact on the company's operating risks, profitability and operating performance. There are many complex and multiplicative factors in the decision-making process, and investment decisions are not always reflected in maximizing corporate value. Over-investment has seriously damaged the value of the company and impeded the development of enterprises. Many listed companies in our country have non-efficiency investment behavior at present.According to the research results with the west, many scholars believed that paying dividends, incurring liabilities, and corporate governance are several important reasons to control over-investment. Because of the special ownership structure and governance mechanisms in china listed companies, we generally pay less dividends. The scope and extent of corporate governance is also need to be proved. This article is based on perspective of the debt governance, through theoretical analysis and empirical analysis, we tried to find the existence of over-investment in Chinese listed companies. In order to prevent and reduce the efficiency of this non-investment behavior, the Author provide a theoretical basis and put forward Countermeasures and suggestions.After empirical testing, we found that many listed companies have the behavior of over-investment, but did not find the evidence that debt play its due role in the governance of curbing over-investment. Consider the industry factor, we found that debt can control over-investment in the manufacturing sector. At the same time, the different term debts play a different part in controlling over-investment. In response to these empirical results, the authors try to make the appropriate explanation and put forward the appropriate policy proposals.