Research On The Inefficient Investment Behaviors Of China’s State-Controlled Listed Companies

Though the reform of China’s state-controlled listed companies has undergone twists and turns, it has progressed. Especially in the last decade, the introduction of the policy guidelines and legal regulations shows the determination of market-oriented reforms of state-controlled listed companies. However, compared with the investment efficiency of private enterprises, that of state-controlled listed companies is not satisfactory. As an important part of national economy, state-controlled listed companies’ investment efficiency is likely to affect the entire national economy. As further reforms are on their way, the study on inefficient investments of state-controlled listed companies has greater practical significance.This article begins with a brief review and evaluation of domestic and foreign study on inefficient investment behaviors, describes in detail the basic theory related to inefficient investment, corporate investment behavior theories and models of inefficient investment behavior. Then, status quo and the reasons for inefficient investment behaviors of China’s state-controlled listed companies are carried out into a detailed analysis. Furthermore, the empirical analysis of the2002-2010panel data on324state-controlled listed companies on the basis of the Vogt (1994) model finds that there is a significant over-investment sign in China’s state-controlled listed companies in general; bank borrowings can not be formed inhibition of over-investment, that is to say, there are soft budget constraints; managerial ownership can effectively curb over-investment behaviors. Finally, based on the previous qualitative and quantitative analysis, I briefly summarizes the reasons of inefficient investments in China’s state-controlled listed companies, then proposes several recommendations from the corporate, capital markets, policy and legal level.My study is characterized by:First, it systematically summarizes a theoretical framework of inefficient investment behaviors, and adopts a simple empirical model based on solid theoretical support. Second, my study has its own unique views on the selection of variables and indicators. Third, through in-depth and comprehensive study of authoritative reports and the relevant laws and regulations, this article tries to present a complete picture of the current system of state-controlled listed companies, which makes conclusions and recommendations more practical.