Study Of Relationship Between Equity Structure And Investment Efficiency Of Listed Companies In China

As one of the three major activities of the company’s financial management, investmentdecision-making plays a significant position as the company’s most important financial decision.The level of investment efficiency not only affects the corporate financing and dividend decisions,but also the value of enterprise and business risks. With the development of Chinese capital market,the investment efficiency of listed companies has gained much attention of society. Due to ourspecial market environment, the investment efficiency of listed companies financing is lower, sohow to solve these problems and improve the investment efficiency of equity financing is theproblem cries for solution by practitioners and researchers. Analysis of relation in financingstructure and investment efficiency has great significance in theory and practice.The article selected169listed companies from Shanghai and Shenzhen Stock Exchanges as thestudy sample, based on the data from2009to2011. First, we describe and analyze the currentsituation of the equity structure of listed companies in China. Second, we summarized the currentsituation and the characteristics of the investment behavior of listed companies. Finally, weempirical study on the investment efficiency of listed companies in China. In analysis we used theExcel2003and Eviews6.0as the analyze software. Excel2003is used to sorting and filtering data,Eviews6.0is used to descriptive statistics and regression analysis.This study shows that:(1) in the past three years, the governance structure of listed company inChina still has a high equity concentration. The investment spending of listed company in China hasincreased year by year, but gets lower investment efficiency, even inefficiency. This study isconsistent with the findings of most scholars;(2) through the empirical test, we found that "internalcash flow","ROE","asset-liability ratio","the largest shareholder stake" variables together have asignificant impact on the investment efficiency of listed companies in China. Positive correlationexists between company investment expenditures and internally generated cash flow; the stake ofthe largest shareholder role was negatively correlated with the efficiency of investment in listedcompanies.