Ipo Over Financing And Investment Efficiency

The phenomenon of IPO over financing has become a hot topic in recent years. IPO over financing behavior leads to the waste of resources and damage the function of resource allocation of capital market. The companies may misusing the over financing funds and resulting in excessive investment when they obtain the IPO over financing. In the face of the huge IPO over financing funds, a large number of companies funds may be idle due to the managers lack of the ability to control large funds, limit of the investment opportunities, difficult to find suitable investment difficult to find suitable investment direction and limit of the use of the use of the IPO over financing fund. Leading to the companies investment shortage, and resulting in the allocation of resources inefficient.The paper researched the relationship between the IPO over financing funds and the investment efficiency and on the analysis of522IPO sample data formed from the period2006to2010in China’s A-share Market board. How the investment efficiency of companies when the issuing and listing of companies obtaining the actual funds far more than plans to raise funds (IPO over financing funds).This paper uses Richardson (2006)’model to measure the efficiency of investment of companies, the investment efficiency data of companies choose the IPO’ next year taking into account the lag of using IPO over financing funds. Firstly, we use the listing annual data to estimate the optimal investment level of next year. Secondly, we obtained the efficiency of investment data after the listing year (the actual investment minus the optimal investment). The empirical result proves that IPO over financing is more likely to result in insufficient investment, In other words that the company obtain IPO funds excess more than planned to obtain funds, companies are more likely to appear the phenomenon of lack of investment. Considering that the IPO over financing funds related to the use of specification in2009, we according year to group of the samples and found IPO over financing has significant positive influences on excessive investment before2009. But after2009, IPO over financing has significant positive influences on insufficient investment.