The Empirical Analysis Of The Corporate Governance And The Investment Efficiency Of Chinese Listed Companies

Since the theory of separation of ownership and control in modern enterprise be found by the Berle and Means, the study of the separation of ownership and control has been a hot topic in economic circles. Meanwhile, foreign scholars not only have been many achievements about how to resolve these agency problems, but also spawned a number of related theories such as agency theory, asymmetric information theory, contract theory and so on. After the scholars found that the reality of the economic environment as information asymmetry between principal and agent led to a conflict of interest. Hart pointed out that the agency problem exist in the business, and this agency problem can not resolved because of the large transaction costs the perfect contract through the proper solution, then how to ensure that shareholders can get the appropriate return on investment become the scholars study. On this basis, the foreign scholars point out the corporate governance, and with the Asian financial crisis and emerging corporate scandals pushed the corporate governance to unprecedented heights.Foreign scholars found that corporate governance have a great relevance on corporate investment, such as free cash flow, debt levels will lead to the performance of enterprises in investment. However, corporate governance contained in the content is too wide, involving all levels of corporate management, like the stock structure, board composition, executive compensation and the design of incentive mechanism, capital structure and so on. These factors interact to form a complex corporate governance, domestic and foreign scholars is difficult to objectively evaluate the process of corporate governance. Investment in modern financial management is one of the three major decision-making, because of its long time span involved, a huge amount of very far-reaching impact on enterprises, good investment efficiency is critical long-term development of enterprises. The study of relationship between of corporate governance and investment is very important in theoretical and practical. Because of the special background of China’s economy, China’s state-owned shares of listed companies in common and ownership percentage are too high, so the current study suggests that our level of corporate governance of listed companies is poor. And domestic scholars to study the phenomenon of investment in listed companies, and found that over-investment and under-investment are very common in listed companies. So, how to improve corporate governance to improve the efficiency of business investment is very important. Foreign scholars point out, because corporate governance is affected by interactions between multiple variables, using a single variable is not an accurate description and in the empirical process prone to measurement error, thereby affecting the empirical results.Therefore, this paper is learn from LRT, constructed five main components of corporate governance by principal component analysis, through the five principal components to describe the corporate governance system.In this vein, this article is structured as follows:The first part is an introduction. In this section will describe the research background, significance and the ideas and methods of this study.The second part is the literature review. In this section I will briefly discusses the origin and development of corporate governance. Sorting through the literature, I find that the current investment in research on corporate governance focused on a certain aspects of corporate governance in enterprises.The third part is the analysis of corporate governance theory and investment efficiency.In this section includes key concepts of this analysis and the analysis of the theory. This section will detail the concept of corporate governance theory and the basic theory, about the relationship of corporate governance and investment decision-making. Meanwhile, in this part, the paper briefly introduces the current empirical study of how to use specific variables represent complex corporate governance, and how to judge the investment efficient.The fourth part of this article is the research design. This part will introduce the empirical data sources, and how to get 5 Corporate Governance large principal component through the principal component analysis. Finally, this paper design a model to judge the relationship between the corporate governance and investment efficiency, I hope that this model can explain corporate governance how to effect investment efficiency in listed companiesThe fifth part is empirical analysis. First I analysis the situation of corporate governance of listed companies through the descriptive analysis by SPSS, then I grouped 712 samples into 2 parts,252 samples are over-investment and 460 samples are under-investment by the modified Richardson model. Finally, through the analysis of the regression results by different group, I find that same factor of corporate governance have a positive relationship with investment efficiency, and same factor have a negative relationship with investment efficiency.Part sixth is about same conclusion and recommendations. In this section, this paper will analyze the empirical results obtained with the theory of corporate governance and the relationship between investment efficiency. And at the end of this paper I put forward same suggestions, hopes to improve the corporate governance of listed companies and to make a good effect to investment decision.Through this empirical analysis, the main conclusions of this paper are follows:1. Shareholding concentration, the proportion of state-owned shares, the proportion of non-tradable shares negatively correlated with investment efficiency.2. Tradable shares higher the percentage of the total share capital of more investment to improve business efficiency.3. Corporate board meetings, board meeting, the number of meetings of shareholders when a certain optimal level of investment to improve business efficiency, and when the "three meetings" more times than the optimal level, they cannot increase the efficiency of investment contribution.4. Supervisory board size and scale of investment efficiency, and no significant affect to investment efficiency.5. Liabilities could inhibit corporate investment.6. The relationship between executive pay and investment efficiency is not obvious.7. Executives stake to insufficient investment in the enterprise can improve the efficiency of business investment, and excessive investment in business tomorrow although a positive correlation with the investment efficiency, but the performance is not significant. 8. Two jobs-one on the investment efficiency is not clear.The main contribution of this paper and the lack of are as follows:In this paper, the process of writing the following two major contributions: First, the CSI 300 index constituents for study, the latest data for 2005-2009 were selected for empirical analysis. Can be found through the analysis of listed companies in China the latest corporate governance and investment conditions; the second is overcome by the principal component analysis of a single variable or a small number of variables to describe the process of corporate governance, measurement error, can be more comprehensive analysis of the companies listed companies in China governance.This deficiency is mainly in the process of principal component analysis, variable selection on corporate governance is not enough rich, detailed description of the company cannot process all the factors, and empirical process in the two-level executive pay and the investment efficiency of one unclear.