Empirical Study Of Chinese Listed Family Firms Ineffcient Investment

In recent years,China’s economy maintains a steady growth,the macro level investment is one of the important driving force for the promotion of the economic growth.Especially after the global financial crisis,China’s economy is still able to maintain a steady growth,this is inextricably linked with the macrolevel investment. Ho we ver,the high investment will lead to the low efficiency of investment.Information asymmetry is an important feature of the market economy,in addition to various principal-agent problems,making the company’s investment often deviate from rational investment level,resulting in inefficient investment.Inefficient investment refers to the part of the investment that is deviate from rational investment spending.Inefficient investment not merely damages the value of the company,but also hinder the development of the company,more importantly,it is not conducive to the healthy development of the macroeconomy.Therefore,it is essential to analyze the impact of inefficient investment factors on a micro level and make relevant recommendations. Problems of the development of family firms have been a common concern of the theoretical and practice fields, a lot of research are based on the financing point to analyze and solve serious family firms financing constraint problems, but the investment after the financing problem is the key factor to the growth and development of the family firms.This paper analyzes the basic theory of the principal-agent theory, information asymmetry theory and the resulting inefficient investment in the family business, then proposes some factors which may influence the inefficient investment of China’s listed family firms and make relevant assumptions.This paper conducts a regression test on datas of188listed family firms between2009and2011,all the datas are collected from CSMAR and Wind database.This paper learns from Richardson’s (2006) research thoughts and constructs a reasonable investment model to arrive at the level of inefficient investment of listed family firms; from Vogt’s (1998) research ideas to build inefficient investment and free cash flow model as well as the influencing factors model of inefficient investment,the factors (YS) includes the shares proportion of the family, the proportion of independent directors, the directors and managers duality situation,the scale of the board of supervisors, management incentives,the shares proportion of institutional investors and the degree of products market competition.From the above theoretical analysis and assumptions,combined with the descriptive statistics and regression test of the sample data by the model,we arrived at the following conclusions:China’s listed family firms exist inefficient investment phenomenon.Inefficient investment and free cash flow are significantly associated with high sensitivity.Most internal factors tested with relate to the corporate governance are not significant with the effect on inefficient investment,only the increase of the shares proportion of executives alleviate the company’s inefficient investment.External factors tested about corporate governance are significant with the effect of inefficient investments, the shares proportion of institutional investors can inhibit the company’s inefficient investment,competitions in products markets can also alleviate the company’s inefficient investment.Finally,combined with this normative and empirical research,this paper proposes following policy recommendations:optimizing the shareholding structure,strengthening the construction of the board of directors,improving the status of the board of supervisors,improving the management incentive system, strengthening the supervisory role of institutional investors,making the capital market more perfect.