Impact Elements And Effect On Entrust Investment Of China’s Listed Companies

In general, entrust investment means entrusting party let trustee to manage its assets. In China, the assets are limited to currency fund. Listed companies have been entrusting investment since1990s. Listed companies usually choose two methods for entrusting investment.One is choosing brokers as trustee, investing in securities markets; the other is choosing bank as trustee, investing in financial products. The first half of2013, due to the money shortage provoking the liquidity crisis among banks, the financial product yields rose dramatically. The listed companies of hosting large own cash flow are rushing to purchasing these high financial product yields. The action of listed companies to delegate the huge monetary funds for financing, would make great influence on company’s business and large impact on the entire capital market. After all, entrust investment is such a low efficiency activity, why the listed companies are so enthusiastic about? This thesis makes a statistical analysis of date of Shanghai and Shenzhen listed companies buying financial products in recent three years, and summarizing some features of this action firstly. Then takes MTC as a case studying the effect of entrust investment. Although entrust investment can bring some benefits to companies, it is not an efficient investment activities after taking the cost of capital and the time value of money into account. Excessive zeal on entrusting of listed companies may affect the sustainable development of companies.