A Study On Investment Behavior And Efficiency Of China's Listed Companies

Investment is one of the most important financial decision,and it involves the collection and allocation of capital.Investment plays an important role in the course of firm's development,so it gets the attention from financial expert, economist and entrepreneur.As the most driving force and the base of the future cash flow, investment influences the risk,earning and assement of development direction.Investment is the first step of corporate decision.Our country is new capital market,and there are many faultiness in our country's capital market,and these faultiness will influence the investment behavior and capital allocation efficiency.China's listed firms are under the strong control of larger shareholders,while larger shareholders have enough control right to establish the investment decision to meet their purpose and benefit. At the same time, short time stockjobbing transaction is the mainstream in our country's stock market,and listed firms lost their development direction,and their investment behaviors are short time.Under these condition, the investment behaviors are distorted heavily in some degree,while the low efficiency of capital allocation is caused by inefficiency investment behavior which is prevalent in listed firms.With the development of capital market,the research on the investment behavior and efficiency based on China's capital market condition and corporate governance structure characteristic become more and more important and imminence.Uusing qualitative analysis and quantitative analysis method,this paper studies the investment behavior characteristic and capital allocation efficiency of listed firms from the angle of corporate governance,and put forward some useful suggestion.This paper's work has important theory value and realism significance to the study of listed firms'investment behavior and efficiency, making policy,the durative development of listed firms,and investment decision behavior of investor,etc.Using econometric method as the most important method ,this paper studies the structure and distribution of investment behavior,and the influencial factors such as financial behavior,governance structure,liqiudy level and production market.This paper also studies the overinvestment of free cash flow,and analysis the relationship between investment behavior and corporate value. Except for the first chapter and the second chapter,the study evolves four levels.The first level (the third chapter) describes the investment structure and distribution of listed firms.This chapter studies the investment characteristic from several anagles,such as investment component,distribution condiction,time characteristic,and analysises the investment distribution of different size,year and industry.The result draw three conclusion.First,the share of maintance investment is low and the share of new investment for listed companies during 2000-2005.Second, there is direct ratio correlation between the share of large shareholders and investment, and the more share large shareholder hold, the more the largest shareholder can influence the investment decision of listed companies. Third, there is direct ratio correlation between the share of large shareholders and investment size, and the more share large shareholder hold, the more the large shareholder can influence the investment decision of listed companies.. With the successive promotion of share-trading reform and arriving of full listing time,the behavior of largest shareholder will have new characteristic, and the investment behavior and efficiency of listed firms will become hot topic.The second level (the forth,fifth and sixth chapter) deeply studies the characteristic of investment behavior and efficiency of listed firms from three anagles such as the influence factors,the use of free cash flow and investment efficiency. The forth chapter analysises the influence factors to investment behavior of listed firms,such as raising capital behavior,share structure,asset feature and production market,and provides an new explain for the investment behavior of listed firms.We can draw four conclusion from this chapter.First, there is direct relationship between equity raising and investment level, and equity raising can play direct incentive effect.Second,share structure of listed firms have important influence on investment, and there is direct relationship between the share of largest shareholder and investment size.Third,there is inverse relationship between asset liqiudity and investment size.Fourth,the total investment,capital investment,new investment increase with the risk and competenent ability,and the more large the risk and competent ability,the larger the investment size.The fifth chapter analyszes the use of free cash flow of listed firms from micro anagle,and studies the cause of overinvestment and underinvestment.This chapter can draw three conclusions. First,there is some extent overinvestment tendency and produces the abuse of raising capital.This pheonenna do harm to the development of listed firms and shut the ability of its capital refinancing,while decrease the reputation of total capital market. Second,when FCF>0, listed firms may have no better investing opportunity,both total investment and new investment are decrease,and firms do not use more capital,so free cash flow is direct.Third,when FCF<0, the total investment,new investment and expected new investment is direct,and the firms have tendency of overinvestment to cause the inverse free cash flow.So these firms must depend on out capital to meet the demand of investment.The sixth chapter study the asset injection and capial allocation efficiency,and talk about the investment efficiency and firm value of listed firms,and futher analyzes the influence of investment and share structure on investment efficiency.We can draw four conclusions from this chapter. First,in general,there is direct relationship between investment size and financial performance,but CFO,Tobin's Q and M/B decrease with investment size.Second,some performance index,such as MROA,ROE,ASST and CFO,doesn't increase with capital investment size,but suggests a decreasing tendency,and this suggestes capital investment is inefficiency in some extent.While for the market index such as Tobin's Q and M/B increase with capital investment.Third,ROA,MROA,ROE,ROS,ASST and CFO increase with new total investment, and this suggestes that there is direct relationship between new investment and investment efficiency.While the market index such as Tobin's Q and M/B decrease with new total investment,and the market value of listed firms doesn't increase with new investment size.Fourth, ROA,MROA,ROE and CFO increase with the square of largest shareholder's share while Tobin's Q and M/B decrease with the square of largest shareholder's share,this suggestes that there is inverse relationship between performance and market value.Selecting Wanxiangqianchao(000559) as sumple, the third level(the seventh chapter) analyzes the investment structure and behavior of listed firms,and talks about the charactericstic of listed firms from the anagle of financing structure and corporate governance.This chapter traces the direction of equity financing capital and non-equity financing capital,and the results suggest that the investment direction of Wanxiangqianchao(000559) match the total development strategy and long benefit,and can promote the raise of its competetance.Further more,this chapter also analyzes investment behavior's influence on the change of performance.The results suggest that the investment efficiency of Wanxiangqianchao(000559) is high,the causes include not only macro environment but also micro characteristic of Wanxiangqianchao(000559).The fourth level (the eighth chapter) talks about the methods of controling investment behavior and promoting investment efficiency.These methods include forcing the information disclosure mechanism,strengthing the outside direction and control, perfecting the corporate governance,etc.We can not only build better market envirment for listed firms,but also raise the competent ability and development ability of listed firms,优化investment behavior and investment efficiency.In the last ,the performance and market value of listed firms can be raised.The key innovations include:1.This thesis studies the influence on investment behavior from financing behavior,share structure,asset feature and production market.And this paper builds comprehensive analysis structure.The innovation suggestes that investment size of listed firms increase with financing size,the largest shareholder's shares,risk,competent ability,and decreases with asste liquidity.From these aspects to study the investment behavior is new test,and provides new explain for investment behavior of listed firms from particular side.2.This paper measures free cash flow,overinvestment and underinvestment by expeted building investment model.This can test the explaination ability of agency theories to the relation between investment size and internal cash flow. The innovation embodies from two sides.First,when FCF>0, listed firms may have no better investing opportunity,both total investment and new investment are decrease,and firms do not use more capital,so free cash flow is direct. Second,when FCF<0, the total investment,new investment and expected new investment is direct,and the firms have tendency of overinvestment to cause the inverse free cash flow.So these firms must depend on out capital to meet the demand of investment.3.This thesis studies the investment efficiency of listed firms by exploring performance and market value, and researches the influence effect of investment on investment efficiency. The innovation embodies from three sides. First,in general,there is direct relationship between investment size and financial performance,but CFO,Tobin's Q and M/B decrease with investment size.Second,some performance index,such as MROA,ROE,ASST and CFO,doesn't increase with capital investment size,but suggests a decreasing tendency,and this suggestes capital investment is inefficiency in some extent.While for the market index such as Tobin's Q and M/B increase with capital investment.Third,ROA,MROA,ROE,ROS,ASST and CFO increase with new total investment, and this suggestes that there is direct relationship between new investment and investment efficiency.While the market index such as Tobin's Q and M/B decrease with new total investment,and the market value of listed firms doesn't increase with new investment size.Fourth, ROA,MROA,ROE and CFO increase with the square of largest shareholder's share while Tobin's Q and M/B decrease with the square of largest shareholder's share,this suggestes that there is inverse relationship between performance and market value.Over all,the influence of investment size on performance and market value is deviation in some extent.