Analysis On The Over-investment Behavior And Related Factors

The investment behavior of enterprises is an important basis for a reasonable capitalstructure, and it is an important determinant of corporate balance development. The decisionof investment behavior will affect the production operations, resource allocation and financialdecisions. The result will be a direct impact on business performance, profitability, anddevelopment prospects. In recent years, the phenomenon of blind expansion, over-investmentexists in our enterprises. This lead to China’s overall economic overheating, excess capacityand resources focus on certain areas of low profitability, a large number of resources arewasted.The over-investment refers to investment behavior beyond the capacity of its productionand operation, excessively expand the enterprise scale, invest in negative net present valueprojects, damage the economic interests of the enterprise, and reduce the value of theenterprise. Excessive investment has become an important factor of constraint the balancedevelopment of listed companies, enhance the value of the company. The study of whetherthere is over-investment behavior exists in China’s listed companies, analysis of associatedfactors, identify the reasons leading to over-investment behavior of listed companies as wellas the constraints, put forward countermeasures and suggestions to inhibit the over-investmentin listed companies, optimized for enterprise reform, promote the development of the nationaleconomy.The paper first analyzes the significance of over-investment and the research of domesticand foreign scholars, focuses on the definition of the concept of over-investment and thetheory about over-investment. On the basis of theoretical studies, hypotheses are broughtforward, and build academic model of over-investment behavior. Then use the sectionaltime-series data of A shares Manufacturing Listed Companies during2006-2010to dodescriptive statistics of variables of new investment models and over-investment model. Usethe method of OLS and stepwise regression to do the regression of model, measure the levelof over-investment, make analysis of the impact and constraints of over-investment,inspection and research hypotheses. Finally, conclude and summarize the theoretical andempirical research, put forward several suggestions to inhibit over-investment in listedcompanies in accordance with the results of the theoretical research and empirical research,this has a reference value.