Property Right System, Cash Flow Sensitivities Of Investment, And Investment Efficiency

As one of the most important factors that effect on the corporate value, the investment is the research focus in financial field. Based on the property right system, and by concern the relationship between the capital investment and cash flow, and the analysis of the investment efficiency, this article further studies on the subject whether the invest decision is influenced by imformation or agency problem. The property right economics consideres that the property right institution have important influence to the economic development and economic efficiency. By define the enterprise structure of ownership, principal-agent chain, background and the interest to the people who conduct the economic activities in the organizations, property right institution influence the business activities directly. So, we also can analysis and research the corporate financial behavior from the perspective of property right system.According to the nature of property right, the chinese corporations can be divided into the state-owned enterprises and non-state-owned enterprises. With the development and perfection of China's socialist market economy, two types of enterprises have different development characteristics and requirements. To the state-owned enterprises, how to make them to be the subjects that can survive and develop in accordance with the market requirements are the current main tasks. However, to the non-state-owned enterprises, especially to the private enterprises, we advocate and encourage them develop, and the business scope and fields they can operate are also become gradually easier in police. On this background, this article mainly observes and compares the differences of the investment behaviors to the different property right enterprises.According to the structure of property right, they are various forms, such as the only one big share, equity decentralization, and ownership balance, etc. Different ownership structures always represent different contradictions and conflicts among the relevant interested persons. In case of the only one big share, the big share can directly control the company, so the agency questions always show the confliction betweent the big shareholders and small and medium shareholders. The equity decentralizations mean that there are no absolute holding big shareholders or relative holding big shareholders in companies. so, in those companies, how to restrict the manangers to infringe the interests of the shareholders become the main problems. In ownership restriction conditions, there are at least two or more big shareholders who all have the right of control. Any big shareholders and company executives can not make decisions alone. So, the balance relationships have the effect of mutual supervision and inhibit plunder. Of cause, the efficiency behaviors also existing on this relationship, such as excusing, arguing back and forth, and taking over power among holders. Those all have influence to the corporator investments.Fistly, the topic significance, research ideas and structure arrangement are given in this article. Secondly, we ananlyse the property rights system features of the Chinese corporators after reviewing the related literatures. Thirdly, by referecing the theories of the property right economics and combining the Chinese institutional background, we theoretically analysis the relationship between the property system and corporator investment behaviors. Fourthly, we have empirical test of cash flow sensitivity of investment of the different property arrangement corporators, as well as the cause of the results. At last, the conclusions are given.The results show that, the cash flow sensitivities of investmennt are all through significant test to the different property rights enterprises in china. But the reasons of the sensitiveties are different. Because of the property right relations and national system, the state-owned enterprises financial environments are better than non-state-owned enterprises. But also because of the limitation of the state-owned property institute, the over-investments are more likely to take place in the state-owned enterprises. For this kind of enterprises, the over-investment is the main reason to the sensitivities. To the private-owned enterprises, it is the financing environment that causes the cash flow sensitivities of investmennt. It also makes them treat the investment projects very carefully which easily lead to insufficient investment. In order to resist the financing constrains, they always need to hold more cash.Further, we also analyze the cash flow sensitivities of investmennt between the central government control enterprises and local government control enterprises. We found that, whether the central government-control enterprises or local government control enterprises, in the aspect of the investment, they all have stronger investment power and demand. Their differences are not significant. But, because of the financial incomes and financial resources in the central governments are far more than local government, the central government-control enterprises' economic status and industry layout, as well as their stronger profitability, the financing constrains of the enterprises which are owned by central government are lighter than the enterprises which are owned by local governments.Based on the property structure, we found that the cause of the cash flow sensitivities of investment is the conflicts of interest between the big shareholders and minority shareholders in case of the only one big share. To take the numbers of holdings of the biggest shareholders as the proxy variable of the interest consistency between the big shareholders and minority shareholders, we found that with the numbers of holdings of the biggest shareholders inceasing, the cash flow sensitivities of investment are falling. Further, we take the control rights, cash flow rights and the resolutions betweent the control rights and cash flow rights into account. The resultus show that the control rights of the big shareholders increase, the cash flow sensitivities of investment are also increase, this reflected that the control shareholders have "occupy effect". But with the cash flow rights increasing, the sensitivities decreased it stated that cash flow rights have "incentive effect". The resolutions much stronger, the incentive effects are even weaker. The control shareholders would pursue himselfe interest, such as expand investment, and it makes the sensitivities much greater. The little resolutions means the interests of the control shareholders tighttly relate to the cash flows, and it restrain the control stocker to do harm to the benefit of the company, and make them take more cautious to the investment, so the sensitivities should be dropped. These results support that the free cash flow hypothesis can be used to explain the cash flow sensitivities of investment in case of the only one big share.To the corporators of the equity decentralization, managers can easily make ues of their power to overinvest for the short of the supervision of the shareholders. This will enhance the cash flow sensitivities of investment. But along with the increase of management incentive measures, such as increasing the management level of salary, expanding the management of the shareholding, etc, the states will be changed. We didn't find the relevant evidences that the imformation will cause underinvestment.Theoretically, the increase of the equity restriction ratio will enhance the supervision effect to the biggest shareholders and managers, improve the enterprise investment efficiency, as well as the game among the close shareholders, such as excusing, disputing over trifles, and seizing power, etc. But our inspection results proved the former and no relevant evidence to testfy the latter. So, the cash flow sensitivities of investment will decrease with the equity restriction ratio increase. This also states that the free cash flow hypothesis can be used to explain the cause of the ash flow sensitivities of investment.This study not only gave a further explain to the company investment behavior from the perspectives of property rights system, but also standing in the financial behavior standpoint, comparied the current different enterprise property right system arrangement. By testing the cash flow sensitivities of investment in different nature of property right and the property right structure of the enterprises, This paper provides data support to the state-owned enterprises high agency cost, as well as our country overheated investment, and inefficient investment effect. At the same time, we also prove that the enterprises with different property right structures are mainly facing all sorts of agency problems, and provide empirical evidence for how to reduce the agency cost.