The Influence Of Regional Soft Environment On China’s Private Listed Companies’ Investment Efficiency

By virtue of the effective integration of resources, regional soft environment has received extensive attention from society. The construction of regional soft environment can promote the overall development of regional economy and provide a favorable environment guarantee for the benign cycle of economic development. As entities of the market economy, the business activities of enterprises are all affected by the regional environment. Because the economic strength and the social background of private enterprises are relatively weak, their business activities are more susceptible in the environment. As one of the most important activities of enterprises, the efficiency of investments have vital impacts on the capital gains and development potential of enterprises. Therefore, the investment efficiency of the private enterprises is also easily affected by region environment. From a practical point of view, investors have realized that they should consider the effects of external environment factors on the investment efficiency when decision making, and the government has also gradually realized the importance of creating a good regional soft environment. However, the inefficient investment behavior is still common in private enterprises in China. Facing this reality, the author thinks that it is very necessary to study the influence mechanism between the regional soft environment and its elements and the private enterprise investment efficiency. Thus, it can provide more reference for enterprises when investment decision-making as well as help the enterprises consider the effects of regional soft environment in their future investments. In details, enterprise can make more effective investment plan to access to environmental advantage and reduce such inefficient investments that enhancing the investment efficiency and the value of the enterprise. It also helps our government be fully aware of the importance of regional soft environment construction, promote the guiding role of government in the market economy and reduce the waste of social resources. Based on the above points, this paper focuses on the regional soft environments of different areas located by Chinese private listing corporations. This paper divides the regional soft environment into institution environment, policy environment, market and culture environment, education and technology environment as well as financial service environment. This paper also processes the regional soft environment of private enterprises to be quantified by the data selected from "Chinese Provincial Enterprises Business Environment Index Report". The author uses Richardson (2006) model to calculate the residual value in order to evaluate the investment efficiency of private listing corporations. Regarding domestic case studies and empirical analysis referring to regional soft environment and worldwide studies about investment efficiency, this paper analyzes how regional soft environment system and its composition factors work on the investment efficiency of Chinese private listing corporations from the aspects of theoretical explanation and empirical research. From this study, we can see that regional soft environment system and its composition factors have significant positive effect on the investment efficiency of private listing corporations. In other words, the better regional soft environment conditions, the higher investment efficiency of private listing corporations. From the number of non-efficiency investment behavior, better regional soft environment of private listing corporations leads to less underinvestment and overinvestment phenomenon. The results of this study show that paying more attention to this kind of effects and improving the regional soft environment of private listing corporations are beneficial for enhancing the investment decision level of enterprises, promoting investment efficiency and improving the overall development of social economy.For this entire paper, its main contribution lies in the following three aspects. Firstly, this paper researches the investment efficiency of private listing corporations within the regional soft environment background, which provides a new perspective for related studies. The findings of this paper are the supplements and extensions of the existing research results. Secondly, this paper constructs a theoretical regional soft environment system for private listing corporations. This system starts from the perspective of managing investment behavior, and it systematically summarizes the relevant theories of regional soft environment and has a certain significance on the future researches. Thirdly, this paper preliminarily meets the needs of how regional soft environment works on the investment efficiency of private listing corporations. This paper establishes a theoretical model of regional soft environment whose regression results can provide a scientific and reasonable explanation for the relevant practical problems of enterprises and governments. This means a certain innovation significance.