The Impact Of Information Disclosure Quality On Investment Efficiency

Corporate investment decisions are important financial decisions, which establish connections between financing decisions and the distribution of profits bond. If the investment is of high efficiency, the capital which is used to distribute will be adequate, and then the financing will also be easier than before. So we can say that the investment decision is critical for businesses, determining whether the enterprise can occupy a place in the fierce market competition.MM theory holds that in a perfect market, when the net present value (NPV) of the project is positive, the business will invest. Meanwhile, abandon the project when the NPV is negative. However, the reality is not so. The actual situation of the capital market, is that, companies easily overinvest and underinvest,which are called non-efficiency investments.The inefficient investment problem is the result of many factors. The information asymmetry and agency conflicts are the most important. Asymmetric information exsists between the company and the external creditors, managers and shareholders. Even internally between shareholders, controlling shareholders and minority shareholders differ from each other. Agency conflicts are due to the separation of ownership and management. The manager is responsible for the daily management practices, and the shareholders are involved in major projects in the annual poll. Self-serving behavior of managers make them not to maximize the benefits of the company, also, shareholders suffer.Taking into account our specific institutional context, the efficiency of investment in the listed companies, is the stage we must go trhough into the mature. Most of China’s listed companies restructure from the state-owned enterprises, and the traditional business model of blindly expanding production scale is rooted in these corporations. Liquidity, the absence of the body and the insider control exacerbate the non-efficiency investments. Compared with investment in state-owned enterprises "overheating", the performance of the private sector is underinvestment,"cold".funds are not sufficient, resulting in a lot of missed good investment opportunities. Visible, Chinese listed companies are the rainbow night, and the inefficient investments are serious. Over time, the damage by related parties not only reduce the value of the company, hinder corporate sustainability, and is not conducive to the healthy development of the national economy as a whole. In addition, the external capital markets for the potential investors, often pay too much attention to short-term value of the business. Speculation is serious.There are many problems in product market competition, and the most prominent is the vicious competition and product homogeneity. On the one hand, in a lucrative industry, the influx of a large number of businesses lead to oversupply, also a great waste of resources; on the other hand, the market’s quick success, result in the latecomer simply imitate the first entrants’products rather than innovation and improvement. Both the two problems will lead to inefficiency, and also the unequal between the inputs and the outputs.For these reasons, I believe that the research of China’s listed companies investment efficiency and its influencing factors, is imminent. This study combined qualitative and quantitative analysis, starting from the quality of information disclosure, to study its impact on the efficiency of investment, and further based on product market competition perspective, to consider the impact of information disclosure quality to investment efficiency.Finally, from improve the level of information disclosure, strengthen the CPA profession team building, perfect the capital market supervisory mechanism and standardize product market competition, these four aspects, the author puts forward policy proposals, hoping to help optimize the investment behavior of listed companies,improve investment efficiency and achieve the interests bumper between the shareholder and the managers.This study, based on descriptive statistics, correlation analysis and regression, think that the improvement of the information disclosure quality can alleviate the problem of inefficient investment. In addition, from the perspective of the intensity of market competition, market regulation and competition position, further study the effect of the quality of information disclosure on the investment efficiency. The study found that a fully competitive market make it possible to improve effect of the quality of information disclosure on the investment, but not obvious on the underinvestment.The main innovation of this paper include the following points:(1) accept the integrated indicators of the information disclosure quality from the Shenzhen Stock Exchange (including voluntary disclosure and mandatory disclosure of information),rather than the one-sided indicators focus on the mandatory information disclosure only.(2) fractionize the competitive factors into the intensity of competition, industry regulation and industry competitive position,these three dimensions, emphasis on when the companies face different competitive environment, how the information disclosure affect the quality of the investment efficiency.