Promotion Competition Of Local Government Officials, Marketization Degree And Investment Efficiency In Enterprises

The market mechanism is an ideal way of promoting the investment efficiency of enterprises in general but it fails to act as a decisive role with the economic transformation of China. Correspondingly, the local government behavior may have a profound impact on the external environment of the enterprise production and management to some extent which will certainly result in the failure of the guidance of the market competition and price mechanism on the investment behavior of the enterprises which may affect the investment efficiency. In fact, the government action is a kind of outward manifestation of the officials’ motivation. Therefore, the study is broadened from the government to the officials by evaluating the influence mechanism and effect of local officials and marketization degree on the investment efficiency. Besides, the study interprets the influences of marketization degree on the relationship between the government and the enterprises. So a new explanation for the internal mechanism of how the government affects the production and management activities of enterprises is provided. As a result, the study will have a practical significance on optimizing China officials governance model and consolidating the micro foundation of economic growth.The thesis adopts the method of signaling game theory combining with the government intervention theory to analyze the behavior and equilibrium state of local officials, market and enterprises, which establishes the theoretical model of how local officials’ promotion competition and the marketization degree influence the investment efficiency of enterprises. The thesis empirically analyzes the influence of local officials on the investment efficiency of the enterprises within the domain from the perspective of the local officials’ promotion competition and personal characteristics. And by classifying the sample data, the influence of the corporate ownership nature and the enterprises location on the promotion of local officials and investment efficiency is discussed. Both the marketization variables and the local officials’ promotion competition are included into the analysis framework of the investment efficiency of enterprises. The study shows that the local officials’ promotion will inhibit the efficiency of local enterprise investment and the inhibition will vary with the property of business ownership and regions. The investment efficiency of enterprise is also affected by local government officials’ personal characteristics like age, tenure, sources and work experience. Besides, the degree of marketization can not only optimize the investment efficiency of enterprises, but also weaken the inhibitory effect of the officials’ promotion competition on the investment efficiency of enterprises. Further research shows that increasing weight of environment and people’s livelihood indicators in the official examination system continuously plays a role in improving the investment efficiency and weakening the inhibitory effect of the promotion competition.The first innovation of this thesis is that by adopting the method of signaling game theory, the study establishes the theoretical model about how local officials’ promotion competition and the marketization degree influence the investment efficiency of enterprises. The second one is that the study of the relationship between investment efficiency and local government is expended into a more micro level, with the thesis focusing on the relationship between the local government officials and the investment efficiency of the enterprises from the perspective of promotion competition and personal characteristics of local government officials. The last one is that we try to improve the official assessment mechanism and empirically analyze the influence of this improvement on the relationship between the local government officials’ promotion competition and the investment efficiency of the enterprises.