Empirical Study Of The Non-efficiency Investment Of Chinese Small And Medium-sized Listed Companies Under Growth Enterprise Perspective

Small and medium-sized enterprises play important roles in China's economic development.Investment as important activities of enterprises,the efficiency of which affects the result whether enterprises could realize its long-term strategic objectives and enhance the value.At present,mostly literature researches study from debt structure,debt maturity perspectives and emphasize on the impact of financial constraints and free cash flow,to find out the factors which lead to inefficient investment.There is little research particularly focus on how internal governance structure effects enterprises' investment efficiency.At the same time,seldom study consider the fact that enterprises under different growth situation show different internal governance characteristics and thus the result of investment will be different.At present there rare study concerns the growth of enterprises when they focus on investment behavior.This paper introduces the growth perspective and then using the data of China's listed SME during the period 2010-2014,from theoretical and empirical point of view(separately build three model:the growth evaluation model,inefficiency investment measurement model and inefficient investment analysis model)to study the relationship between internal governance and inefficient investment.The results are as follows:(1)non-efficiency investment often happens in listed small and medium-sized enterprises,which under-investments are more common in the market.(2)The degree of inefficient investment and enterprises' freedom in cash appeared a significant positive correlation,indicating a high degree of sensitivity that exists between the two,(3)The largest shareholder's stake has a significant inverted"N" type relationship with non-efficiency investment,which showed more obviously in low-growth enterprises.(4)There has a relationship between executive compensation and non-efficiency investment.Companies who with high-growth could consider using equity incentive strategies to encourage managers make wise investment decisions.As for those low-growth companies monetary remuneration play important role in declining non-efficiency investment.(5)The internal oversight mechanisms have not made desired effect for enterprises' non-efficient investment behavior,both in high-growth and low-growth enterprises.Setting Supervisory Board can effectively alleviate the non-efficiency investment.However,the number of independent directors and the power-balance between the Board of Directors and Supervisory Board failed to alleviate the non-efficiency investment phenomenon.Based on these empirical results,combined with China's market economy environment,this paper puts forward policy recommendations from the establishment of a long-term internal corporate governance mechanisms to enhance enterprises investment efficiency:(1)Optimizing the ownership structure and strengthening major shareholders' liability;(2)Strengthening the management responsibility and improving the quality of professional managers;(3)Perfecting the mechanism of compensation and incentive effect.For those enterprises who with high-growth,they should pay more attention to management equity incentives while others should emphasize on monetary remuneration policies.(4)Improving internal control mechanisms to ensure the independence of supervision.Especially for those low-growth enterprises,they should focus on the supervisory role of the Board of Supervisors.