An Empirical Research On The Effect Of Listed Companies’Equity Structure On Inefficient Investment

The development of China’s capital market is still not perfect, so it is the internal governance mechanism of listed companies. This objective circumstance makes it very common for listed companies to reserve capital for no use or blindly invest in high risk projects. The inefficient investment not only hindered the healthy development of the enterprises, also can reduce the resource allocation efficiency of the whole society, it is necessary to study on this issue. At present, domestic and overseas scholars have not reached consistent conclusions on the study of inefficient investment. And from the perspective of equity structure to study inefficient investment, literature is not enough rich. Also the conclusions of overseas documents are not suitable for the capital market environment in our country and the special system background of the listing corporation. This thesis researches on the influence mechanism of equity structure on inefficient investment, wishing to make a contribution to the related research of equity structure and the development of investment efficiency of listing corporation in China.This thesis mainly concludes the following six parts:the first part is the introduction, recommending the background and meaning of selecting this subject, explaining the research purposes, research contents and research methods. The second part is the literature review, reviewing the related domestic and overseas literatures, summarizing the existing literatures about equity structure, constraints of inefficient investment and the relationship between equity structure and inefficient investment. The third part is the theoretical analysis and the research hypothesis, with the Principal-Agent Theory and Information Asymmetry Theory as the starting point, we analyze the cause of the inefficient investment problems of listed companies and the influence of equity structure. Based on these, puts forward the hypothesis of this thesis. The fourth part is the research design, according to the research hypotheses proposed above select and define variables, then design different model according to different research hypothesis, making full preparations for empirical analysis. The fifth part is the empirical test and the empirical analysis, with1280listed companies’6400samples of panel data from A-share listed companies in China who have distort investment during the period of2008-2012, we test what effect equity structure has on inefficient investment. Also we consider how different the effects are between the state-owned listed companies and non-state-owned listed companies. The last part is the summary, concluding the empirical test, proposing policies and suggestions, pressing the possible innovations and presenting the deficiencies.In this thesis, through theoretical analysis and empirical research we get the following main conclusions:firstly, the ownership concentration of listed companies in China and the inefficient investment is positively u-shaped relationship, no matter the listed companies are facing under-investment or over-investment problems. Secondly, the equity restriction ratio of listed companies is negatively related to the inefficient investment behavior, it means the higher equity restriction ratio is the more it can alleviate underinvestment and restrain the excessive investment. Thirdly, compared with non-state-owned listed companies, the state-owned listed companies are more likely to have over-investment problem; Compared with the state-owned listed companies, non-state-owned listed companies are more likely to have under-investment problem.The main innovation of this thesis lies in the following two points. One is that this thesis is based on our country’s special institutional background, market environment conditions, and the governance of listed companies, combing the two hot topics of equity structure and efficiency of investment. Using the latest data, combining the current policies and regulations, we put forward reasonable suggestions for our country’s listed companies to improve the efficiency of investment. It is timeliness and scientific. The other one is through the empirical research of equity structure’s influence on the inefficient investment, this thesis expand the category of equity structure research, enrich the theory and empirical studies of the influence factors of the efficiency of investment.