Research On The Over-investment Behavior’s Restrict Mechanism Of Listed Companies

At the micro level, enterprises’investment efficiency is directly related to the enterprises’development and related to maximize enterprise value. At the macro level, investment is also an important force in promoting economic development. But investment cannot be blind, investment growth cannot be too fast, otherwise, if the investment growth exceeds the reasonable range of resource and consumer demand, the economy will be "overheat". They not only affect the sustainable development of companies, but also affect the whole society.In recent years, China’s economy has maintained rapid growth and investment has played a major role in boosting. In order to address the financial crisis and maintain sustainable economic development, governments of all level adopt a series of measures to encourage investment and to stimulate investment growth. But at the same time, the great intensity of macro investment improves investment level of business, a lot of money has been invested in non-ideal project, so in recent years, the existence of over-investment in a listed company becomes an increasingly serious problem. In fact, according to Jensen’s free cash flow hypothesis, high correlation exists between over-investment and free cash flow. In theory, improving the corporate governance structure can curb excessive corporate investment behavior in certain extent. This article is based on this background and studies issues of over-investment behavior and restricts mechanisms.This paper chooses A-share listed companies for the study. Through the establishment of the expected investment model, this paper estimates the expected investment spending, and measures the over-investment with the difference between it and new investment of business. Then the paper introduces corporate governance variables, analysis of whether the shareholding structure, independent directors and manager’s shareholding effect over-investment. Test results show that, in corporate governance factors, manager’s shareholding plays a regulatory role to restrain free cash flow of over-investment in certain extent, but the proportion of the largest shareholder, equity and balance and proportion of independent directors are not significant to over-investment, and they cannot play a regulatory role. This shows the governance structure of listed companies in China needs to be further improved. Finally, according to the conclusions of this study, this paper puts forward relevant policy recommendations, hoping to establish a reasonable corporate governance structure of listed companies to effectively curb over-investment behavior.