Industrial Policy Impact On Corporate Investment And Efficiency

The traditional investment theory on corporate investment is based on the Microcosmic perspective, which does not fully consider the influence of external macroeconomic factors and industrial policy. In reality, corporate behavior (and corporate output) is inevitably affected by those factors. Thus, this paper attempts to study the influence of industrial policy on corporate investment and efficiency. As a representative of the new energy, photovoltaic industry investment has attracted wide attention in recent years. Whether the photovoltaic investment fluctuated abnormally in the circumstances of industrial policy or not? Whether there exists general overinvestment as experts predict?On the basis of the review and analysis of preliminary studies, the author gives further analysis of industrial policy effect on corporate behavior and outputs.Also, the paper evaluates the effect of China’s photovoltaic industry policies. The macroscopic data shows that in recent years,Chinese photovoltaic industry has experienced continued expansion driven by favorable policies. It seems that many corporates are investing overly.Based on the theoretical analysis, the paper uses the panel data of Chinese listed photovoltaic corporation from2007to2012.With related theories, the paper uses the method of empirical research to analyze the impact of industrial policy on corporate investment and its efficiency. The conclusions are as follows:(1) Positive industrial policy will stimulate the scale of investment of photovoltaic corporations in China.(2) During2007and2012,among listed photovoltaic enterprises,33.84%of firms deviate from the optimal level of investment for over-investment,66.16%photovoltaic enterprises still invest insufficiently. Overall,there exists no problem of excessive investment in the photovoltaic industry. The current range of problems raised by investing are mainly caused by the investment structure.(3) Industrial policies issued did not cause enterprises to expand investment blindly and the level of investment efficiency remains almost the same. Even with their own development and external market demands, China’s photovoltaic industry is still in a state of underinvestment and the status is worsening.According to conclusions of this study, the paper puts forward relevant suggestions on the development model and industrial policies of China’s photovoltaic industry. Only with better innovation ability and domestic market demands, can the implementation of industrial policy play a better role and improve its international competitiveness.