An Empirical Study On The Enterprises'inefficient Investment

Since the reform and opening up,Chinese economy keeps a fleet rate of increase,consumption,exports and investment play an important role in the development of Chinese economy. Investment is the companies' driving force,it is also the important base of the future cash flow. So it is necessary to have a proper understanding of the corporations' investment behavior. Theoretically , the enterprises should invest the project whose net present value is above zero or abandon the project whose net present value is below zero on the goal of maximizing enterprise value. However,the enterprises may give up positive net present value investment projects,or invest a project whose net present value is below zero because there are serious information asymmetry and principal-agent problem in the imperfect capital markets. At this time,the enterprises deviate form the goal to maximize the value of enterprises. Thereby leading to inefficient investment(under-investment or over -investment),damaging the overall benefits of the shareholders and the enterprises. Many domestic and foreign scholars have studied the enterprises' inefficient investment behavior,but their conclusion is not entirely consistent. So clarifying this point has theoretical and practical significance in standardizing corporations' investment behavior and improving corporations' investment efficiency.This paper has reviewed the theoretical and empirical research both at home and abroad,and made further theoretical analysis systematically on how the information asymmetry and principal-agent problem cause the enterprises' inefficient investment behavior,on which this thesis brings forward the analysis hypothesis. Then,taking the financial data of high-tech enterprises in Shanghai and Shenzhen stock markets form 2007 and 2008 as research samples,research whose performance of the inefficient investment behavior(under-investment or over -investment),the paper also researches the true influence of financing capacity, quality of accounting information and corporate governance mechanisms to inefficient investment behavior of Chinese listed company. Results shows:(1) The under-investment rather than over-investment is prevailing in Chinese high-tech enterprises. (2)The high quality of accounting information can curb the under -investment to a certain extent , but when the shareholding ratio of largest shareholders is increasing,it is very easy to lead under-investment. (3)Other corporate governance mechanisms,such as state-owned holding,independent director system,separation of chairman and general manager of two staff,salary incentive and share incentive of executives have no effect on inhibiting under-investment. On this basis,this thesis concludes that in order to reduce the information asymmetry,Chinese listed company should improve the quality of accounting information. At the same time,Chinese listed company should also optimize the corporate governance mechanisms to enhance the financing capacity and broaden the financing channels. These suggestions can solve the under-investment problem validly , and enhance the enterprises' investment efficiency.