Empirical Research On The Investment Climate And Quality Of Financial Reports On Investment Efficiency

Enterprise’s investment activity, as one of important activities in the modern company operation, will relate to enterprise’s performance and future prospects for development. Furthermore, it directly relate to the allocation of entire social resource, and then influence the steady development of macro economic. In the real world, the actual investment often deviates from the superior investment scale, the non-efficiency investment consists of the behaviors of excessive and insufficient investment. The excessive investment behavior is that put the capital on the project which NPV is negative, it causes the massive capital be used in the excess capacity of productive field, creating the resources waste. Whereas, the insufficient investment behavior gives up the project which NPV is positive, it takes the enterprise value drop and the fund’s using efficiency lower, losing golden opportunity for developing.This thesis carries out an analysis on the factors which will impact the investment efficiency of China from both theoretical and practical aspects. Firstly, through the analysis, we use the residual error which calcutated by the model of Richardson (2006) to measure the investment efficiency, take accruals quality as the substitute variable of financial reports quality, use the modified DD module the analyse relationship between the quality of financial reports and enterprises’investment efficiency. Then, by introducing the investment climate, taking index of marketization process as the substitute variable of investment climate, this thesis also researches the co-influences brought bout by the investment climate and the quality of financial reports on the investment efficiency of enlisted firms.Here are the findings of this thesis:①The quality of financial repots has an effect on the enterprises’investment efficiency. The quality of financial repots has a positive correlativity with investment efficiency.The better the quality of financial reporting, the higher the efficiency of investment②Under the co-influences of the investment climate and the quality of financial reports, the negative correlativity between the quality of financial repots and non-efficient investment is more stronger when the enterprise locates the better investment environment.According to the researches and findings mentioned above, this thesis comes to a conclusion:the enhance of quality of financial and the investment climate raise the level of investment decision making, improve the enterprises’investment efficiency.In the end of this thesis, based on these conclusions, some suggestions are also provided on how to increase the investment efficiency of the enlisted firms in China.