The Research On The Formation Mechanism Of The Firm Level Over-investment Under The Government Intervention

Over-investment has been the hot research field, a large number of facts show that not only the government in the economic crisis has strong motive power to intervene enterprise investment activities, but also it is a kind of inefficiency investment behavior in normal environment.At present, the related literatures are mostly from the sight of company-level (corporate governance and financial behavior). But the researches on putting the enterprise investment behavior into the specific system background are also insufficient. Only a few results show that the government intervention lead to the firm-level over investment behavior and most of the empirical research is restricted to the state-owned sample. So the extent of the researches conclusion restricted thoes external validity. Different from previous literatures, this paper fully absorb the existing research results and make the government intervention as the breakthrough point. This study also builds a theoretical framework covering the elements of government intervention. It explores the inner source how the government intervention lead to the over investment and aim to provide policy for decision-making.This paper tries to answer the following questions:How many types of over investment? What is the root of over investment? Just because agency problem or other reasons? Whether the government put the public management goals or its officials private interests into the enterprise? How about the resource allocation? What kind of enterprise is more likely become the object of government intervention? The phenomenon of "a new official applies strict measures "is exsit? Whether the local officials before leaving office choose the "quiet life" or "a final push"? Unfortunately, the above problems in theory has not yet been researched systematacially. Only a few literature from empirical method confirmed that China enterprise over investment and government intervention are related.Therefore, this paper studies the following problems step by step: Firstly, this paper only studies the firm-level over investment caused by government intervention. Only confirmed the result that over investment is significantly related to government intervention is not enough. So this paper argues that there need more reserches answer the issue why does the government want to interv the enterprise investment activities, It is also the primary task studied in this paper.Secondly, when the local government decided to interv the enterprise, the next question is:what kind of enterprise is more likely to be the object? What are the different characteristics of enterprises?Thirdly, the more important problem is:how the government intervention implementationed to the enterprise and lead to the over investment? In other words, what is the media proxy between the government intervention and the firm-level over investment? This is the core of this study. It studies the transmission mechanism between intervention motivation and the objects.Finally, the above studies answer those issues:the motivation of government intervention, the characteristics of enterprises and the transmission mechanism between the government intervention and enterprises over investment. But it is worth noting that, the analysis was just from the static perspective. However, the enterprise excessive investment may change with the tenure of government officials. So this research also dicusses the preblom from a dynamic perspective.In empirical research, this paper selects2003-2010years in China Shanghai stock exchange and shenzhen stock exchange listing company as research samples, and eliminate the samples as the following:(1) the financial company,such as bank;(2) the listed company with ST\PT\*ST;(3) the listed company issuing B shares or H shares;(4) the listed company which controlled by foreign investor or social groups;(5) the right of control is changed;(6) the listed companies of data loss.The main results are:(1) The motivation of government interventionMultiple regression test results show that the state-owned listed companies help the local government to promote economic development and ease the pressure on fiscal deficit. At the same time, the motivation of alleviatting the pressure of the local government financial deficit also promoted the private listed companies invests more. (2) The characteristics of the enterprise is interventionThe greater the economic contribution state-owned listed companies are more likely to become the object of local government intervention; And in private holding listed companies, this relationship does not exist. For business tax contribution, whether the state holding listed companies and private holding listed companies, business tax contribution to the enterprise the influence of excessive investment is not significant. For state-owned listed company, the income tax contribution is significant positive related with inveatment behavior and in private holding listed companies in this relationship is not significant. From the perspective of dynamic perspective, the excessive investment is not the same within different life cycle.(3) resource distributionIn general, not only the relationship between the local government and the company but also the government right to decide how to allocate the resources among the enterprise are significant influenct to degree of the over investment.(4) the government intervention in timeIn the early stage when the local officials took office, the enterprise investment activity is in a low level; When the tenure gradually extended, local officials have more motives to t intervene investment; At the last year of the tenure, local officials tend to choose "peaceful life", and then reduce to enterprise’s intervention.The innovation points and the main contribution are:(1) The research Angle. From beginning to ending, this paper is always form the perspective of government intervention. So it obtained many comprehensive results which are very helpful for understanding how the government intervention lead to over investment.(2) The theoretical analysis. This paper firstly studied the framework of mechanism about how the government intervention lead to over investment theoretically.(3) The empirical analysis. This paper provides evidence of the micro transmission mechanism about how the government behavior affects economic development.(4) The research content. The research content rich relevant literatures about government intervention and firm-level over investment.In addition, this paper in the following aspects has limitations:(1) endogenous problem;(2) variable structure biased;(3) the period covered by the data is incomplete;(4) variable selection exist the omission of small area.