The Role Of SASAC In The Allocation Of Resources

Modern Enterprise is the basis of the capital market. Although the company’s financial behavior is microscopic behavior, it can affect the efficiency of resource allocation on the capital markets. Corporate financial resource allocation activities mainly include two aspects, namely the allocation of resources in financing activities and the allocation of resources in the investing activities. Investment activity is the most important factor in the formation of the true business value. Therefore, the efficiency of corporate investment is very important for resource allocation of the whole society. In China’s particular institutional context, our state-owned listed company structure is special, so there is complexity in the decision-making process, and the Government has most of the pricing right and configuration of the majority of resources in the market. Therefore, the investment choice of state-owned enterprises will undoubtedly be affected by SASAC. SASAC, as the actual control of state-owned enterprises, is very important in investment decisions and resource allocation.By studying the Chinese state-owned listed companies which are under the control of the SASAC, we can explore the efficiency of the investment decisions of SASAC made for the state-owned listed company. Through describing analysis we found that in the most monopoly industries, the performance of state-owned enterprises is better than private enterprises. We also found that in the industries which are related to national welfare and the people’s livelihood, central-owned enterprises perform better than state-owned enterprises. And the performance of the western state-owned enterprises is not as stable as the eastern state-owned enterprises. Through empirical analysis we found that, firstly, overinvestment of state-owned enterprises is severe than private enterprises. Secondly, we found that different types SASAC and different regions SASAC have different condition of overinvestment. Thirdly, through empirical analysis we found that overinvestment does affect corporate performance. Finally, through empirical analysis we found that managerial ownership and corporate free cash flow can affect the overinvestment of state-owned enterprises. According to the conclution, we can draw more targeted research findings and recommendations.