A Study On The Mediating Effect Of Investment Efficiency Between Capital Structure And Financial Performance

Decision of investment is regarded as the most critical decisions in the management of the company.In modern enterprises,due to the asymmetric information and agency problem,the owners are unable to directly make decisions for the enterprises' operation and management.But the delegated management personnel tend to make inefficient investment decision for personal interest,which injures the interest of owners and enterprises' performance.Coupled with the current economic development of China presents a new normal this latest feature and reform involved in deep waters,enterprises increasingly accelerated the pace of investment and investment efficiency significantly decline,which is not conducive to the long-term development of the enterprise and stable growth of economy in our country.Therefore,improving investment efficiency is an urgent problem to be solved in China's current economic development.With the study of financial governance rising,many researchers consider that the construction of financial governance mechanism could bring supervision and encouragement effect to the management personnel,bridge the agency cost and conflicting interest between the enterprise owner and management personnel,help the latter make reasonable investment decisions and thus improve the performance of enterprise.As one of the financial governance mechanism,capital structure reflects the proportion of the sources of capital.However,different capital structure will have an influence an the behavior of investment,resulting in low-level investment and poor financial performance.To the end,this paper from the utilitarian point of view,the manufacturing companies as a research sample,incorporates capital structure,investment efficiency and financial performance into a unified theoretical frame for study and discuss practicability of capital structure influence an the decision making and investment of the management staff of the enterprise which leads to the improvement of the investment efficiency and total performance.This thesis focus on the thinking of “capital structure,investment efficiency and financial performance”,uses investment efficiency as mediating variable and builds its mediating effect model and examines path coefficient and mediating effect by SEM.The results suggest that capital structure not only directly affect the enterprise's financial performance,can also affect the enterprise's financial performance through investment efficiency intermediary role.And the mediation effect of investmentefficiency superior to the direct effect.Therefore,the one-sided pursuit of rationalization of capital structure does not improve the financial performance of enterprises.It is necessary to guide the rational investment of enterprise management personnel through the internal governance of capital structure and reduce non-efficiency investment so as to improve the financial performance of enterprises.It provides guidance and decision-making basis for enterprise owners and managers to determine reasonable capital structure and investment decisions.