Research On The Correlation Between Managerial Power,Process Of Marketizationand Investment Efficiency

In enterprises’economic activities, investment is one of the most important. It is the concrete manifestation of long-term development strategy. The investment efficiency not only depends on the corporate’s capacity and the projects’quality, bust also is influenced by managerial power and process of marketization. The managerial power is the result of the game among governance structure, ownership structure and stakeholders. The process of marketization reflects the regional external constraint. The relationship between these two elements and investment efficiency has great significance for regulators in optimizing the market order, and for the corporate in improving its governance.After the financial crisis in2008, the Chinese government launched the "4trillion" stimulus package, which caused widespread emergence of corporate overinvestment. Based on this special background, this paper collects the annual data of China’s A-share listed corporates from2008to2012, from theoretical and empirical point of view to study the relationship between managerial power, process of marketization and investment efficiency. And we got the following conclusions:(1) Managerial power and inefficient investment have a significant positive correlation, the expansion of managerial power will lead to more inefficient investment.(2) The higher the level of marketization in where the corporate registered, the less possibility the corporate will conduct inefficient investment.(3) The largest shareholder’s stake has a significant inverted N shaped curve correlation with inefficient investment. The stake and inefficient investment are significantly negatively correlated when it is under30%or over50%, and when the stake is between30%and50%, the negative correlation is not significant.(4) The corporate’s asset-liability ratio has a significant negative correlation with inefficient investment, and the corporate’s Tobin Q value of last year, the scale of assets both have a significant positive correlation.Based on these results, we offer some suggestions on promoting corporate’s investment efficiency. From macro level:government intervention should be gradually reduced in order to improve the efficiency of the market, the construction of legal system should be speeded up, the law enforcement should be strengthened, and the professional manager market should be improved. From micro level:optimizing the corporate’s governance structure and incentive mechanism.