Impact Of Financing Method On Investment Efficiency Of Listed Companies Of West China

In recent years, with the increasing number of listed companies in the west of China, theefficient use of funds that are raised by the listed companies causes more and more attentionof all sectors. Investing efficiently is the most important problem for managing listedcompanies. Investing efficiently directly influences the growth and cash flow of listedcompanies, and thus the operating risk, profit level and prospect for companies. A lowenterprise financing efficiency is a problem that companies from all over the world are facing;in China, it is more prominent. According to modern financial theory, internal financing is thefirst financing option, then debt financing, and equity financing is the last option. This wasconfirmed in developed countries and some developing countries. But the situation for listedcompanies in China is actually very different.Using Western listed companies’ data as the study sample, and combining the uniquemarket environment and economic system of our country, the relationship of equity financeand investment efficiency is closely examined in this paper. The whole research consists ofthree parts: First, based on basic theory and ideology, the statistical method is applied toprecede its analysis on the specific object of study. Second, a regression model is built andvariables are set in accordance with relevant theoretic models and the author’s own viewpoint.Finally, an empirical analysis is done for the above models and the influence of equity financeand debt financing on investment efficiency is systematically analyzed. This paper analyzesthe influence of the different factors in equity financing and debt financing on corporateinvestment efficiency according to regression results, and verifies the hypothesis which isproposed in the preceding paragraphs.Through the above research, the author found that there is an inverted U-shaped relationbetween the first shareholder’s shareholding proportion and the efficiency of investment. There is a positive relation between the state-owned shareholding proportion and theefficiency of investment. There is no significant relationship between the senioradministrators’ shareholding proportion and the efficiency of investment. There is an invertedU-shaped relationship between debt ratio and the efficiency of investment. There is nosignificant relationship between the short-term debt ratio and the efficiency of investment. Allthe information above provides an important basis for listing the financing of listedcompanies in the west of China in the future.