An Empirical Research On The Effect Of Financing Constraint On Investment Behavior Of The Chinese Listed Company Based On The Control Of Large Shareholder

This paper reviews the relevant domestic and international research literature about financing constraint, investment - cash flow and the investment behavior base on major shareholding systematically. And, we study on effect of financing constraints to investment behavior based on the control of major by theoretical and empirical analysis.In the theoretical analysis, we reconstruct KZ model by adding the excess rate of return function based on the control of major shareholder. The theoretical analysis showed that: Lack of investment phenomenon is due to the differences in internal and external cost of capital arising from information asymmetry, transaction costs. However, the relationship between the financing constraints and investment - cash flow sensitivity is not simply linearity, and the occurrence of lack of investment due to financing constraints must on special preconditions. The effect of major shareholder controllers'over- benefit to over-investment is not linear relationship. Perhaps it's performance for "tunnel effect" or "convergence of interest effect".Differing from previous relevant research, in this empirical analysis, we take long- term equity investment and material investment as explained variable at the same time and describe the financing constraint by the index such as comprehensive scale, ROE and times interest earned, and take the descriptive analysis and regression testing for both long-term equity investment and material investment. Regression results show that: Material investment is affected by the financing constraint and growth markedly, comparing with it, the long-term equity investment is affected by investment opportunities.We also take regression analysis under different the sample group by financing constraint, the nature of the largest shareholders and share of largest shareholder. The regression results show that: (1) In the case of material investment, the regression results that taking the ROE or times interest earned as proxy variables of financing constraint show that there is positive relationship between the financing constraints and investment - cash flow sensitivity; but the regression results that taking the comprehensive scale as proxy variables of financing constraint show that there is a negative correlation between these two variables. (2) There is a negative correlation between the level of corporate investment and financing constraints. The relevance between material investment and financing constraints that described by ROE is significant, while the relevance between material investment and financing constraints that described by comprehensive scale is significant. (3) In the case of material investment, comparing with state-owned enterprises, there is less significant over-investment take place in the sample of the non-state- owned enterprises and even shows phenomenon of lack of investment. As for the long- term equity investment, there will show more serious phenomenon of over-investment in the sample of non-state-owned enterprises. (4) In the case of material investment, while the condition of Ownership structure change from relative controlling to absolute controlling, there is less phenomenon of over-investment; but there is more serious phenomenon of over-investment for the sample of the long-term equity investment.