| In recent years, Chinese economy maintained stable and rapid growth. Investment has played an important role, but not all investment is efficient. Inefficient investment which is company investment behavior deviated from the traditional financial theory. That is not all profitable investment projects or investment projects that do not profit. Investment plays an important role in survival and development of enterprises.Therefore; examination of inefficient investment has practical significance. In China, the state-owned shareholders can not exercise their rights directly; they exercise of the rights of shareholders by proxy. Therefore, controlling shareholders of listed companies has not control company managers directly and effectively, and even in some cases, shareholders agent colludes with company managers. In this context, the corporate boards that make decisions investment, to a certain extent, may exceed the controlling shareholder. In this paper, the combination of normative and empirical methods of analysis. This paper discusses macroscopic characteristics of the board, members of the Board background characteristics and the characteristics of independent directors, which affect the inefficiency of investment behavior of listed companies. The paper also proposed possible ways to improve. The value of the company in the capital market is subject to the investment, as well as the manifestation of this effect has been studied, and test whether capital markets can identify and suppress acts of inefficient investments. This article is divided into six parts, each part, as follows: The first part is the introduction first introduced the background and significance of this article; followed the framework of research are described. That this paper, through theoretical analysis and empirical research, tests the general characteristics of the board of directors of listed companies, the background characteristics of board members and independent directors characteristics, which affect investment behavior; and tests the capital market's ability that identify inefficiency of investment behavior. This research is the intersection of corporate finance and corporate governance structure. Section of research ideas detailed analysis,.The part of the framework used map to make it more clear and easy to understand.The second part is the literature review. This part analyzes and summarizes the theory of inefficient investment. One theory of inefficiency investment driven summarizes through the principal agent theory, asymmetric information theory and the theory of overconfidence respectively. The domestic and foreign literature of corporate governance, board characteristics influence on inefficiency investments is hard to find. A lot of literature about relationship between corporate governance of listed companies and inefficiency investment often involve a number of board characteristics variables. The article analyzes the literature of relationship between board characteristics and inefficiency of investment. Finally, the literature of inefficient investment and value of the company is described.The third part is the theoretical analysis. Firstly the basic concept of inefficient investments, board characteristics and enterprise value was introduced. Agency theory and asymmetric information theory also have been explained. Secondly, also investment decisions and institutional background of the board has been combed. Sum up the provisions and recommendations about investment decisions and the board, mainly from "The Company Law", "state-owned assets law" and so on. Background system had a significant impact on the board characteristics On the one hand, these systems are rigid, listed companies must follow; the other hand, the system provides elected board members of listed companies guidance and reference. Finally, relying on the part of the theoretical basis and institutional background, discuss the relationship between characteristics of the board of listed companies, inefficient investment behavior and enterprise value. This part selected board size, CEO duality condition, frequency of meetings, the proportion of shareholding and the proportion of the salaried to measure general characteristics of the board; selected board member qualifications, age, gender, full-time board member of four indicators to measure the background characteristics; selected the proportion of independent directors and the frequency of the meeting of the two indicators to measure characteristics of independent directors. The analysis that relationship between inefficiency of investment and the corporate value is obvious, but the capital market response was not so simple, you need this empirical test.The fourth part is about assumptions, variables, models and data. Hypothesis was carried out, which is about characteristics of Board, inefficient investment and the corporate value. Secondly, this chapter sets the experimental variables and control variables, three multiple regression models were constructed. Use the general characteristics of Board, background characteristics of board members and characteristics of independent directors as explanatory variables; verify the impact on inefficient investments. Use inefficiency of investment variables as explanatory variables; verify the impact on firm value. Finally, the samples and data of empirical research are described. In this study, selected the sample of 1698 from 2007-2009 A-share listed manufacturing companies in China. Use of EXCEL for data processing and filtering, and use SPSS13.0 for descriptive statistics, correlation and regression analysis.The fifth part is empirical results, firstly, empirical test of inefficient investments found that China's A share listed companies in the manufacturing sector inefficient investment levels significantly lower in2008 than in 2007 and 2009. Secondly, empirical test of characteristics of the board found that board governance is better, the listed company's inefficiency of investment is less; some background characteristics of board members variables have an impact on inefficiency of investment; independent director system did not affect the inefficiency of investment. Finally, empirical test of characteristics of the board found that the inefficient investment is on the higher degree, valuation of the company is higher in the capital marketThe sixth part is Conclusions, policy recommendations and ideas for improvement. This section summarizes the results of empirical research that the board governance structures of the company significantly affect on inefficiency of investment behavior; a good board governance structure can significantly inhibit the inefficiency of investment behavior. The cognitive abilities of members of the Board have a certain influence on inefficient investment behavior, but this may be affected by the behavioral characteristics of board members. External oversight board of the company had no significant effect on s inefficiency investment behavior. The company independent director system is not obvious and effective inhibition inefficient investment. Empirical test of enterprise value found that listed company inefficient investment behavior significant effect on firm value. Inefficient Investment act is the more serious, value of the company is higher. So the lack of information disclosure of listed companies, inefficiency of investment behavior may not be identified . even if investors recognize the inefficiency of investment, they may buy stock for the purpose of chasing short-term acquisition. The more serious inefficient investment, the higher stock prices, the more corporate value. Then, based on the results of empirical research, make several policy recommendations, such as strengthen the board governance, adjust the standard of board members elected and enhanced disclosure of investment information. Finally, present their views of possible improvements, as to measure the efficiency of investment, Improve the variable of the board characteristics and the mechanism of the reaction of capital markets.The main contribution of this paper is, first of all start from the perspective of board characteristics, and board characteristics have been reclassified. Literature in the past often features as the Board of Directors Corporate Governance is an integral part of inefficient investment behavior of business studies. This study will focus on board characteristics, divided into general characteristics, background characteristics of members of the board and the characteristics of three independent directors. Secondly, explore the capital market the reaction and test the inefficient investment impact on firm value. In the past people estimated inefficient Investment level, they often use the variable value of the company, and assume that the investment enhance the value of the company, which is reasonable investment. However, the degree of development of capital markets and information disclosure issues make this assumption not reliable. This study used a modified inefficiency of investment calculation model, and it can be used to explain the value of the company. |
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