Investment Behavior Of Small Board Of Listed Companies In China

Enterprise investment behavior is one of the deciding factors, which decide value of future cash flows and business development prospects. However, because China’s capital market is an emerging market, there are a lot of imperfections on the small and medium-sized board of listed companies which leading to non-efficiency investments. Well, we analysis the investment behavior of small plates listed company by ownership structure point of view. This paper will provide new evidence to explain the different ownership structure investment differences, and complement some literatures about the governance structure of China’s small board listed company investment behavior. Optimize the investment behavior of China’s small board of listed companies, and encourage listed companies to improve the ownership structure and to strengthen corporate governance has important practical significance.This paper use data of small and medium-sized board of listed351companies in China,2010.This paper use the method of the multiple linear regression Vogit We empirically investigate how the largest shareholder and concentration ratio of shares influence a firm’s investment-cash flow sensitivity, and we evaluate the cause and the process of their relationship. The results are as follows.First, investment of listed companies of different nature of equity is significantly different. The possessory vacancy problem of state owned enterprise is serious, which often manifested as excessive investment, its behavior supports the free cash flow hypothesis. But the private nature of the enterprise internal management must take into account the investment decision of private costs and private profit, they tend to avoid investment risks, overall appear inadequate investment, its behavior supports the theory of information asymmetry hypothesis.Second, Companies of the same ownership nature, with ownership concentration changes, the company’s actual dominant force also changes, its investment behavior changes. Its characteristic is relative to the other two types of ownership concentration, ownership dispersion when the company investment is low, but with the ownership change from decentralization to centralization, the controlling shareholder will pay more attention to private benefits of control rights, firm inefficient investment behavior will be relieved.Third, The proportion of the first shareholder will influence a firm’s investment, showing a different situation, The relation between controlling shareholder’s shareholding and corporate investment behavior shows the inverted U relation.Finally, China SME board listed companies generally exists over-investment and under-investment behavior.The paper gives a series of policy recommendations aimed at the actual situation of SME board listed companies as well as the risks, including some regulations construction of Strengthen the large shareholder’s liability and investor protection laws, optimizing the ownership structure and establishing an effective system of board of directors.