Research On The Influence Of External Governance Environment Upon Investment Efficiency Of Listed Companies

Investment, as a pull one of the’troika’of China’s economic growth, has always been attached great importance to by our government sector. Efficient investment behavior can promote the growth of enterprise value, and then to have an incentive effect upon stable and health development of national economy. However, in recent years, inefficient investment problems have frequently happened to the listed companies. The main reason is that our country is currently in economic transition period, and the legacy defects of planned economic system still have the potential impact on the operation environment of market economy, thereby resulting in relatively slow of marketization process, inefficiency of law enforcement, excessive government intervention in the economy and underdeveloped financial market, which has provided the institutional space for the arise of inefficient investment of enterprises. The inefficient investment problem of micro enterprises is the important factor which restricts the growth of macro economy. Therefore, how to constraint the inefficient investment behavior of enterprises is currently an urgent need for our government to resolve.At present, the institutional hidden dangers exist in our country’s market economy and there are big differences existing among the external governance environment of different regions. Thus, from the perspective of external governance environment, to explore the influence mechanism of inefficient investment of enterprises may be the fundamental way to solve the issue. Additionally, different types of ultimate controller exist in our country’s market economy simultaneously, which can influence the effects of external governance environment upon different property nature of enterprises to a certain extent. Therefore, putting different ultimate controllers into the research framework, with the use of data of 700 companies listed on Shanghai and Shenzhen Exchange from 2007 to 2013, this paper deeply explores the influence mechanism of external governance environment on the investment efficiency of listed companies.The research shows (1) external governance environment can obviously influence investment efficiency of listed companies, which means companies in region with higher marketization degree, lower government intervention, higher financial development and law enforcement level have a higher level of company investment efficiency; (2) The effect of external governance environment upon investment efficiency of listed companies is affected by the characteristics of ultimate controller. Specifically, external governance environment plays a more significant role in constraining the inefficient investment of state-controlled listed companies compared with non-state-controlled ones. (3) Differences exist in the effect of external governance environment on investment efficiency of listed companies with different administrative ranks of ultimate controller, namely external governance environment being more effective in constraining the investment efficiency of listed companies under central government’s control compared with the ones under the control of regional governments.