Research On Debt Maturity Structure And Over-investment Of Listed Companies

Both debt maturity structure and over-investment are important parts in theory and practice of modern corporate. The short-term liability and long-term liability have different effects on enterprise governance. Short-term debt can reduce information asymmetry, decrease costs and restrict debtors. While long-term liability can inhibit refinancing risk. And investment has a large effect on the development of Chinese economy. But because of restrict of resource and consume demands, "excess invest" phenomenon exists in many industries and regions with the excess increase of the investment. Over-investment is applying cash-flow to projects whose net present value is less than zero, which injures the value of whole business enterprise beyond the company growth opportunity or development direction. The Chinese market is not fully developed. Furthermore, the ownership framework of most enterprises is not appropriate. The over-investment trend of Chinese listed company is very obvious and serious under above condition. Over-investment question has become an important restriction to long-term development of Chinese listed company. Existing research results indicate debt affects the over-investment. On one hand, the debt can restrict the free cash-flow of managers to limit the over-investment. On the other hand, the debt can make share holders invades debtors benefit, as asset substitution, which can contribute the excess investment. To deep analysis the debt effect mechanism to over-investment, this article studies the debt effect to over-investment against the background of state-owned shares. At present, with the improvement of capital economy, debt and investment decisions are both attracted by a high attention in enterprises. Consequently, it is a valuable topic for research on debt maturity and excess investment.According to the scholars’s research about debt maturity and excess investment, the article first introduces some theory and governance of debt maturity structure, and analyzes the domestic short-term and long-term liabilities. This article builds model of debt maturity structure and over-investment and makes regression analysis accompany with different groups about private firms and state-owned business for study. According to Richardson model, it indicates short-term debt plays a prominent restrain role in over-investment. The short-term liability has stronger effects on constraining debtors than long-term liability. It is necessary to match short-term liability and long-term liability which can constrain excess investment. The state-owned business has stronger over-investment tendency than private enterprise, because of state-owned business gaining more support and contributing to over-investment. On the contrary, private businesses face the fierce competition in capital market, causing its short-term debt has a more prominent restriction in over-investment. On the whole, this article makes some explanation about low-efficient investment and offers some references about debt maturity structure and over-investment.