Study On Listed Corporation Investment Behavior And Allocation Of Control Rights

Analysis of the corporate investment decisions occupies a important prominent place in corporate finance. From M-M theorem which was put forward by Modigliani and Miller(1958), basing on the neo-classical paradigm, many western scholars began to relax the Neo-classical assumption of M-M theorem gradually, and the application to modify the scope of"irrelevancy"proposition became to be the focus field in corporate finance. With development of principal-agent theory (Jensen&Meckling, 1976), information asymmetry theory (Myers&Majluf, 1984), contract theory (Coase, 1937), and the corporate governance theory (Berle and Means,1932), these theories have shown up a new viewpoint of research on mechanism of the acts of corporate investment, and expanded the corporate investment theory. But most of researches are set up on comparatively capital market with strong economic free, abundant information flow, and reliable contracts. On the contrary, because our country lacks these basic system quality characteristics of all or the part, its market system demonstrates not standard, not perfect characteristic. So, it is necessary to probe the investment behaviors of Chinese listed corporations based on the current situation of economic transition of our country.Therefore, this paper uses the newest research achievements of corporate investment theory, based on the characteristic of shareholders arrangement, control rights allocations, and the debt structure which are unique by listed corporations in China, according to related theory of Investment and financing, and make the sensitivity between the corporate investment and cash flow as cut-into point, using the combinative method of information asymmetry theory, principal-agent theory, and corporate governance theory, this project probes the investment behavior and its efficiency of listed corporations deeply and systematically in our transition period.The paper structures the corporate investment decision model based on control rights allocation,through comparing with investment criterion in completely market, this model gives the corporate investment level and the main factors under different control rights; then, the dissertation tests empirically the corporate investment behavior deeply and systematically using penal date of Chinese listed companies. The empirical evidence of corporate investment behavior includes four parts. The first part is using penal date sets of china's 410 listed companies from 1999 to 2006, to test the sensitivity between the corporate investment and cash flow in order to investigate investment behavior, the empirical shows that there are both over-investment and under-investment simultaneity because of the imperfect information and agency issue. The second empirical part is to test the corporate investment under different control rights, based on the characteristic of shareholders arrangement, control rights allocations which are unique by listed corporations. Because of the controlling of large shareholder widely, the third part is about corporate investment behavior empirical research under the excess control of ultimate controlling shareholders, the empirical shows that there are over-investment because of the private income of control rights, and, the over-investment problem becomes serious because of the excess control of ultimate controlling shareholders, but the over-investment problem will alleviate along with the increase of cash flow rights of ultimate shareholders. The last part of empirical test is research on the relationship of debt structure and corporate investment behavior, the empirical shows that the financing effects and governance effects of debt are limited in Chinese listed companies, its influence on corporate investment are small.Several following jobs and innovation points of this dissertation has been done mainly:â‘ This paper structures the corporate investment decision model based on control rights allocation. Through comparing with investment criterion in completely market, this model gives the corporate investment level and the main factors under different control rights;â‘¡Based on panel date set of Chinese listed companies, this dissertation test the sensitivity between the corporate investment and cash flow in order to investigate investment behavior deeply and systematically under different control rights;â‘¢In the view of excess control of ultimate controlling shareholders, this paper investigates corporate investment of Chinese listed companies, by using cash flow rights, control rights ,the divergence between control rights and cash flow rights at the first time, the empirical result shows that there are over-investment because of the private income of control rights, and the over-investment problem becomes serious because of the excess control of ultimate controlling shareholders, but the over-investment problem will alleviate along with the increase of cash flow rights of ultimate shareholders.