Research On The Impact Of Private Equity Investment On The Non-Efficient Investment Of Small And Medium-sized Enterprises

Scientific investment behavior and efficient investment are the key to the growth and development of enterprises.Small and medium-sized enterprises'(SMEs)decision on efficient investment is more difficult,becauseofcomplex market environment and their own developmentconstraints.A large number of studies have shown that SMEs are more likely to fall into the investment trap of "under-investment"(Zhang Yingming and Zhang Jing,2017)and "over-investment"(Chi Guohua and Yang Jin,2016).Private equity investment(PE),known as "smart capital",has become the engine of SMEs,playing an important role in financing,investment,corporate governance and so on.Although PE started late in China,it has shown a rapid development momentum in recent years.PE has become the "booster" for the growth of many excellent SMEs.Nevertheless,unlike ordinary debt financing,PE will have a comprehensive impact on enterprises.Moreover,the timing,scale and mode of PE will have different effects on the investment behavior and efficiency.Current research on inefficient investment in PE is relatively inadequate.SMEs are a very important group in China's economic development.It is of great significance to study the impact of PE on inefficient investment of SMEs,in order to support and promote the healthy growth of SMEs,and to standardizethedevelopmentofPE.This paper focuses on the impact of PE on inefficient investment of SMEs.Therefore,this paper follows the research idea of raising questions,analysing theory,developing empirical research and announcing policy recommendation.In theoretical analysis,it is defined the inefficient investment behavior as "over-investment" and "under-investment".Based on the principal-agent theory and information asymmetry theory,this paper studies the factors affecting inefficient investment.Moreover,based on the relevant theory of PE,this paper studies the mechanism of PE affecting inefficient investment,and puts forward the research hypothesis of "PE restraining inefficient investment".In empirical research,this paper uses the revised Richardson(2006)residual measurement model to measure the inefficient investment of SMEs,and uses panel data of 1634 listed companies from 2009 to 2017 to empirically analyze the impact of PE on the inefficient investment of SMEs.The results show that:(1)inefficient investment is common in SMEs.The phenomenon of inefficient investment atSMEs is prominent and rising.Compared with over-investment,the problem of under-investment is more obviously.(2)Different capital conditions have different effects on inefficient investment.The surplus of free cash flow in SMEs is prone to over-investment,while the shortage of free cash flow in SMEs is prone to under-investment;(3)PE has amitigation effect on inefficient investment of SMEs.In general,PE can restrain SMEs' over-investment and alleviate their under-investment.Compared with under-investment,PE alleviates over-investment in SMEs more obiviously.(4)PE with different characteristics has different effects on inefficient investment.The performance includes three levels: the higher share-holding ratio and the joint PE have a stronger mitigation effect on the inefficient investment;the mitigation effect of PE which stay long term at SMEs weakens the effect;mitigation effect of PE on the inefficient investment that is near and far away from the optimal investment is smaller,and the mitigationeffect illustrate as invertedU-shaped.Based on this,the idea of optimizing the investment efficiency of SMEs finally focuses on providing good system and policy for PE and SMEs.Specifically,the policy recommendations put forward in this paper include:(1)optimize the financing environment of SMEs and enhance their financing capacity;(2)Speed up the pace of market opening and increase the equal participation of SMEs in market investment opportunities;(3)Strengthen the Corporate Governance Capacity Building of SMEs and improve the investment decision-makingat Enterprise;(4)StandardizePE's developmen,enhance PE's ability to support SMEs' investment,developPE market and expand PE exit channels.