Research On The Influence Of Leverage Ratio On Enterprise Investment Efficiency

In 2008,the global financial crisis broke out,in order to deal with the crisis and restore the economy,our government implemented a 4 trillion stimulus package.However,as a result of flooding,China’s corporate leverage ratio continues to rise,and has remained high ever since,so the government has proposed supply-side structural reforms since 2015,one of the key measures is deleveraging,to improving the power that financial services the real economy efficiency.Investment is not only an important starting point to promote China’s economic growth,but also a key link in the development of enterprises themselves.There are many reasons that can influenced companies’ investment,and there is no doubt about the role of leverage ratio:if the leverage ratio is too low,the enterprise may face insufficient funds,thus restricting investment activities;if the leverage ratio is too high,it will not only increase business risks and management costs,but also have a negative impact on investment.Based on this background,this paper explores the connection among leverage ratio and enterprise investment efficiency.First,by reading the related essays of enterprise capital structure and investment theory,I make the research assumptions.Secondly,I select the data of non-financial listed companies in China from 2009 to 2019,take the investment efficiency as the dependent variable and the leverage ratio as the key independent variable to set up the panel data fixed effect model for empirical test.At the same time,through the classification of the leverage,I studied the heterogeneous impact of different types of the leverage on company investment efficiency to help them carry out financing planning;through the classification of listed companies,studied the differences of investment efficiency of different types of enterprises affected by leverage ratio,and help enterprises to arrange their own capital structure according to the nature of their industry.Finally,according to the conclusions drawn from the previous studies,linked with the present situation of economic development,the corresponding policy recommendations are put forward.According to the empirical studies I found that:first,the effected that financial leverage ratio upon investment efficiency of non-financial listed companies is an inverted U-shaped,for underinvested enterprises,leverage ratio promotes investment efficiency.Second,the hierarchical study of financial leverage found that,long-term financial leverage has a greater impact on investment efficiency;bank lending financial leverage has a greater impact on investment efficiency.Third,the regression results of enterprise heterogeneity show that in the sample of state-owned companies,the inverted U-shaped relationship still exists,but the influence of leverage ratio of non-state-owned companies on investment efficiency is more inclined to one-way promotion.Between leverage ratio and investment efficiency in mature period,the inverted U-shaped relationship still notable,but there is an simple promoting relationship in growth period and recession period.Through the results,I put forward several advices for the relevant sectors to help enterprises improve investment efficiency and self-value,and developed a sustainable and orderly future of China’s real economy.