| Different from other transition economies,China’s economic reform is implemented under the leadership of the Communist Party of China.The organic embedding of The Party organization into the corporate governance system through two-way entry and cross-tenure is the institutional advantage of Chinese enterprises,and also an important starting point of the new round of enterprise reform.In October2016,General Secretary Xi Jinping explicitly proposed to "integrate the Leadership of the Party into every link of corporate governance,and embed the Party organization into the corporate governance structure".Statistics from the Organization Department of the CPC Central Committee show that by the end of 2016,91.3 percent of public enterprises and 67.9 percent of non-public enterprises had established Party organizations,reaching 189,000 and 1.855 million respectively,and 99.9 percent of non-public enterprises had established party organizations.Since so many companies have established grassroots party organizations,it is natural to ask: what is their place in the corporate governance system?Will the participation of party organizations in corporate governance through "two-way entry and cross-appointment" affect the investment efficiency of enterprises?Does the party organization embed degree,embed effect have difference?What is the relationship between the party organization and other governance subjects of the company?These interesting problems are worth our thinking,but also in the process of enterprise reform urgently to solve the problemTherefore,from the perspective of capital investment,based on the annual report data of A-share companies in Shanghai and Shenzhen stock markets from 2010 to2020 and the party organization embedding data manually sorted by the author,this paper empirically investigates the influence of party organization embedding on enterprise capital deficiency and the difference of the above effects under different principal-agent conflicts.The results show that the embedding of party organization can help restrain the underinvestment of enterprises,and the higher the embedding degree of party organization is,the stronger the effect is.At the same time,the effect of party organization embedding on inhibiting underinvestment is more significant in the group of private enterprises.In addition,this paper finds that embedding governance in party organizations can alleviate the influence of the two types of agency problems on corporate underinvestment to a certain extent,that is,to improve the degree of inefficient investment and reduce corporate underinvestment.According to the subgroups before and after the 18 th National Congress of the Communist Party of China,the inhibition effect of party organization governance on underinvestment is more significant after the 18 th National Congress.Specifically,the article includes six parts.The first part is the research background and significance of this paper.The second part summarizes the domestic and foreign researches on party organization embedded governance,agency cost and capital investment efficiency,and briefly expounds the relevant theoretical basis and concepts,laying a solid foundation for the hypothesis proposal and empirical analysis in the following part.The third part is the concept of the party organization embeddedness,agency cost and underinvestment,and based on the high-level echelon theory,resource dependence theory,principal-agent theory and other basic theories,to clarify the mechanism of the party organization embeddedness governance and agency cost impact on enterprise underinvestment.The fourth part is the research design,collecting data,designing test model and defining the connotation of relevant variables;The fifth part is the empirical results and analysis;Finally,conclusions and suggestions.This study helps clarify the role of embedded Party organizations in corporate governance,and provides certain evidence support for the series of reforms proposed by the 19 th National Congress of the CPC to "strengthen the construction of grassroots Party organizations". |
