An Empirical Study About The Influence On Corporate Investment Behavior From The Internal Governance Of Private Listed Companies

Investment activity of listed companies is a source of assurance and an important foundationfor enterprises to achieve the goal of maximizing the value. It is directly related to the survival anddevelopment of enterprises, and also affects the social resource allocation and efficiencydistribution. However, in reality, many enterprises have the non-efficient investment behavior withdifferent degrees, which mainly includes underinvestment and overinvestment. Underinvestmentwill hinder the realization of the objective of maximizing the value of the company and go againstthe development of the company, and it will also damage the interests of investors at the same time.Overinvestment will lead to massive capital precipitation in areas of overcapacity and cause thewaste of production resources. Meanwhile, it will bring an increase in liabilities, financial risks andoperational risks. Internal corporate governance is an important symbol to reflect the guidingdirection of listed companies’ operating decisions. With the continuous issuing of state’s supportivepolicy for private enterprise, the position of private economy is becoming higher and higher.According to statistics, the number of private enterprises accounting for more than55%of the totalnumber of enterprises in recent years, and the sum of its service value and product value isequivalent to48%of GDP. How is private listed company’s internal governance? How is theefficiency of investment? What is the impact of internal governance to the investment behavior ofprivate listed companies? Based on this, this article explores the influence of internal corporategovernance on the investment behavior of private listed companies both from the theoretical andempirical sides.This paper from the internal governance of ownership structure, board governance and theincentive effect of the three aspects of investment behavior is analyzed in theory. It uses financialdata of362private listed companies in2009, and draws on the experience of Richardson’simproved residual model and builds a multiple linear regression model. The results show that thetwo curves, the relationship between investment proportion of the largest shareholders andinefficient inverted "U " type; equity balance can reduce the inefficient investment behavior; thelarger board size, the company more prone to inefficient investment behavior; the higher theproportion of independent directors, corporate inefficient investment behavior is less; MBO canreduce the inefficient investment behavior; the manager annual salary is higher, more conducive tocurb inefficient investment behavior. Finally this paper optimize the investment behavior of privatelisting Corporation in China, policy recommendations.