A Study On The Impact Of Institutional Investors And Controlling Shareholders’ Equity Pledges On Corporate Inefficient Investment

China’s economic development has entered a "new normal" and is changing to a quality and efficiency-oriented one,which has put forward higher requirements for enterprises.At present,there is a wide range of inefficient investments in China’s listed companies,and there is a wide range of inefficient investments,resulting in inefficient allocation of funds and increased operational risks for companies.Against the backdrop of the outbreak of the new crown epidemic,downward economic pressure and increased liquidity pressure,equity pledging has become an increasingly common form of financing,however,its economic consequences and risks are gradually exposed in actual operation.Controlling shareholders can,by virtue of their control,dominate various corporate decisions and influence corporate value and investment behaviour.Since the implementation of the GEM registration system reform,the results have been remarkable,attracting institutional investors who originally had strong information gathering and processing and professional analysis skills to the GEM market,but there are differences in their influence on the investment decisions of listed companies due to different shareholding motives.This article therefore explores how equity pledging in the GEM market affects the efficiency of corporate investment and whether institutional investors have a positive governance effect.This paper firstly compares the relevant literature at home and abroad,based on principal-agent theory,information asymmetry theory and control privity theory and proposes hypotheses,selects data of 729 enterprises listed on GEM from 2016-2021 as a sample,draws on the Richardson model to calculate corporate inefficient investment,and empirically tests the impact of controlling shareholders’ equity pledges,institutional investors on corporate inefficient investment impact and the moderating effect of institutional investors on the relationship between the two.The study finds that:(1)inefficient investment is a widespread problem,with underinvestment and overinvestment co-existing;(2)pledging of controlling shareholders’ equity aggravates inefficient investment in listed enterprises,and as the pledge ratio increases,the problem of inefficient investment in enterprises becomes more serious,with overinvestment intensifying and underinvestment worsening;(3)institutional investors’ shareholding effectively restrains inefficient investment behaviour in enterprises,and after breaking down different types of institutional investors It is found that,compared with short-term institutional investors,long-term institutional investors mitigate the inefficient investment behaviour of enterprises and significantly restrain both over-investment and under-investment(4)Long-term institutional investors effectively restrain the impact of controlling shareholders’ equity pledges on enterprises’ inefficient investment,and have a significant inhibiting effect on under-investment.In response to the empirical analysis,this paper proposes the following suggestions to improve investment efficiency:(1)limit the proportion of controlling shareholders’ equity pledges,regulate equity pledges and disclose the use of equity pledged funds(2)introduce long-term institutional investors to participate in corporate governance,so as to encourage enterprises to optimise resource allocation...