Research On The Influence Of Insurance Companies As Shareholders On Non-efficiency Investment Of Listed Companies

The China Insurance Regulatory Commission issued the Administrative Measures for the Use of Insurance Funds on January 26,2018.This approach requires insurance companies to use their own funds to purchase listed companies or equity investments in other companies.At the same time,it also classifies the general stock investment,major stock investment and the acquisition of listed companies.The State Council puts forward that insurance funds can use its long-term and stable characteristics to help enterprises raise their awareness of risk management and control,alleviate the problems of financing difficulties and high financing costs in enterprises in economically underdeveloped regions.At the same time,the insurance companies are encouraged to provide financial support to strategic emerging industries,small and micro enterprises,and technology-based enterprises through the form of equity under the premise of ensuring risk control.With the continuous development of the insurance industry and the continuous expansion of the scale of insurance funds,insurance has not only been used as a tool for post-compensation,its financial functions such as risk protection and financing have become increasingly prominent,and the level of governance of insurance companies has been continuously improved.Different from the way that bank shares are used to directly support the real economy through direct credit,the risk control mechanism of insurance participation can improve the credit level of enterprises,thereby increasing the scale of bank loans,and indirectly relieving the problem of investment and financing of enterprises.Insurance companies have the advantage of long-term investment.This feature enables them to support the development of China's real economy in a long-term and stable manner.Therefore,the article analyzes the listed companies with insurance company shareholders in A shares of China's Shanghai and Shenzhen Stock Exchanges in 2007-2016 using the robust standard error under least square method.The article studies the influence of insurance companies' participation on the entrusted agency costs and financing constraints of listed companies,and on this basis,analyzes the effect of insurance companies' participation on the inefficient investment of listed companies,and provides a theoretical basis for the insurance industry to better serve the real economy.The study found that the holdings of insurance companies can significantly reduce the cash-flow sensitivity of non-financial listed companies in China,that is,insurance companies can significantly improve the financing constraints that China's non-financial listed companies face.At the same time,insurance companies can significantly reduce the agency costs of listed companies.Further research suggests that,on the whole,the participation of insurance companies has effectively reduced the inefficient investment behaviors of listed companies.The sub-sample results show that the holding of shares of insurance companies can significantly improve the problem of insufficient investment in non-financial listed companies.However,the effect of insurance companies holding shares on private listed companies is better than on state-owned listed companies.The holdings of insurance companies can significantly curb over-investment of state-owned listed companies and private listed companies,but compared with private listed companies,the holding of shares of insurance companies has a stronger inhibitory effect on excessive investment by state-owned listed companies.