The Impact Of Financial Leverage On Enterprise Inefficiency Investment From The Perspective Of Ownership Structure

Investment and financing is two aspects of the modern enterprise funds movement which is closely related. In perfect capital markets, corporate finance and investment decisions are independent of each other. When relaxing the perfect market assumptions, we find that the financing caused by the stakeholders "friction" will affect investment decisions. As an important way of corporate finance, the liability is an important corporate governance mechanism. Its impact on investment has been empirically tested in the United States, Canada and other developed market economies. Empirical Studies in this regard, however, did not form a unified conclusion, and special ownership structure of listed companies in China may have a certain impact on the governance role of the liabilities.The focus of this paper is to study the role of financial leverage on corporate non-efficiency investments, as well as the ownership structure’s influence on this role. On the basis of summing up the results of previous scholars, we theoretically analyze the role of financial leverage on corporate non-efficiency investments, and then analyze the ownership structure’s impact on the role of financial leverage from the perspective of equity property and ownership concentration. Finally,, an empirical test is made according to the hypothesis put forward on the basis of the Shanghai and Shenzhen manufacturing listed companies in the sample data. Conclusions and policy recommendations of this study are given by analyzing the empirical results.Through theoretical and empirical analysis, the following conclusions are drawn:There exists the phenomenon of non-efficiency investments in China’s listed companies----overinvestment and underinvestment. As to all the listed companies, financial leverages can inhibit overinvestment and facilitating underinvestment. From the perspective of ownership structure, we analyze the impact of ownership structure on the inhibition and promotion of the role of financial leverage from the perspective of equity property and equity concentration. Financial leverage plays a stronger role of inhibiting the overinvestment and facilitating the underinvestment in non-state-owned enterprises, while plays a relatively weaker role in the state-owned enterprises. With the rise of the largest shareholding ratio, the influence of financial leverage on the inhibition of excessive investment becomes weaker and it’s the influence of financial leverage on the facilitating effect becomes stronger.