Free Cash Flow,Ownership Structure And Overinvestment

As the separation of ownership and management,information asymmetry leads to adverse selection and moral hazard,which leads to agency problem between agent and management.When the company has a wealth of FCF,the manager may be profligate,and over-investment is one of the performance.The relationship between FCF and over-investment has become a hot topic in scholars' research.Some scholars study the internal governance of the company,while others study the external environment of the company in the FCF research.The results were different and no consistent conclusions were reached.Based on the theories of FCF,corporate governance and overinvestment,this paper studies the correlation between free cash flow and overinvestment,then studies the relationship between equity structure and overinvestment,and then studies the ownership structure,FCF And over-investment relationship between the three.Finally,this paper puts forward some suggestions,in order to make the listed companies reduce the agency cost.This paper uses the sample from 2009 to 2015 to study the sample data from Shanghai and Shenzhen stock market listed companies,and uses Stata,Excel and other software,empirical analysis of listed companies FCF,equity structure and over-investment relationship between the three.Empirical analysis includes descriptive statistical analysis,one-way ANOVA,regression analysis and so on.The results show that over-investment and FCF positive correlation,the results verify the FCF hypothesis;in non-state-owned enterprises,the company is more serious overinvestment;the proportion of the largest shareholder and over-investment relationship is "U" Equity balance is not related to overinvestment,but equity checks and balances will weaken the positive correlation between FCF and over-investment.In non-state-owned enterprises,equity checks and balances are inversely related to overinvestment.In state-owned enterprises,The proportion of senior executives is negatively correlated with over-investment;institutional investors do not play the role of corporate governance.