| The investment behavior of enterprises is the cornerstone of the main drivers of growth and future cash flow growth. Enterprise's survival has a direct correlation with investment efficiency. With the development and improvement of China's capital market, the number of Listing Corporation grows and the investment behavior has become increasingly active. But at the same time, the listing Corporation's non-efficiency investment phenomenon increased gradually. Over investment is an important representation of this phenomenon.Over investment is always an important issue in accounting and finance field. Due to the special political and economic structure of our country, the government plays an important role in the resources allocation. The scholars in our country focus on how the government intervention affects the over-investment behavior of enterprises, at the same time the impact of managerial characteristics have been paid more and more attention. However, previous studies ignored how the investment decision will be affected when the managers facing uncertainty of the external environment, especially the excessive investment problem brought by the uncertain market demand environment. Therefore, this paper intends to analyze whether relationship investment will influence the over-investment behavior of enterprises.In this paper, we use the A-stock market panel data from 2010-2012 to analyze the effects of relationship investment in the product market on the enterprises' over-investment behavior. We find that enterprises' over-investment behavior is significantly reduced by firms' entertainment expense, as investment in the relationship between firm and customers, and this effect is only associated with over-investment behavior while not significant within under-investment companies. The decreasing effect is more pronounced for firms with fewer agencies cost, better corporate governance, operating in areas with higher degree of marketization and private sector. |
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