Research On The Impact Of Trade Credit On The Inefficiency Investment

Investment decision is one of the most important decisions in the company's financial decision-making.The efficiency of investment is related to the future cash flow of the enterprise and the stable development of the enterprise.Effective investment is an important guarantee to increase corporate value.All along,the efficiency problem of corporates' investment in China is serious,there are inefficient investment behavior in enterprises,it usually can be divided into over-investment and under-investment,inefficient investment behavior is harmful to promotion of enterprise value.Therefore,how to improve the efficiency of investment is a very worthy of study.There are various forms of financing in Enterprises,As an important source of financing,debt financing has a certain impact on the enterprise's investment behavior and investment efficiency,About the debt's influence on the enterprise investment,scholars have accumulated the rich research achievements.As an important source of debt,trade credit has a important role in financing and governance.Based on the trade credit financing function and debt's governance effect,we study the impact of trade credit on inefficient investment.The level of bank debt and the market power of the enterprise market is differences,and internal and external conditions of enterprises faced are not consistent,therefore,the impact of trade credit on inefficient investment may also be different.According to the analysis above,Based on the theory such as principal-agent theory,asymmetric information theory.and Considering the market power of enterprises and the level of bank debt.This article theoretically analyze the relationship between trade credit and inefficient investment and empirically test the impact of trade credit on inefficient investment using data from 2012 to 2016 of A-share listed companies.The results show that:(1)trade credit could exert the governance effect to inhabit over-investment.meanwhile,trade credit can alleviate underinvestment.(2)the function that trade credit exercises its role of governance on the over-investment and the function that trade credit alleviates under-investment are stronger in the enterprises with more bank credit financing.(3)the function that trade credit exercises its role of governance on the over-investment and the function that trade credit alleviates under-investment are stronger in the enterprises with relative weaker market power.The conclusion of this paper is helpful for enterprise management to make rational use of trade credit,play the role of trade credit,and improve the investment efficiency of enterprises.