An Empirical Research On The Influence Of Soft Budget Constraint On Enterprise, Over-Investment

The investment activity has been regarded as an important aspect that affects the survival of an enterprise, it impacts on its overall value directly, so the efficiency of enterprises, investment has always been a research focus in modern corporate financial theory. Many researches pointed capital structure could generate good governance on investment activity, but because of the soft budget constraint the decision makers will expect the additional subsidies from the government or banks and other agencies that leading to the inefficiency of debt governance, so the enterprise more likely make an inefficient investment decision, especially the over-investment. Along with the enterprise reforming, the problem of soft budget constraint has been got much more attention, however there is still a long way to handle it completely, most of the researches related to the soft budget constraint just confined to state-owned enterprises, these researches thought non state-owned enterprises do not exist the phenomenon of soft budget constraints, this judgment is not reasonable for the current situation in our country. Given the important position in the market, this paper will bring the non state-owned enterprises into the scope of the soft budget constraints study, then using the empirical research to explore the relation between the soft budget constraint and the enterprises, over-investment in different properties compensating the loophole in the field.First, the paper reviews related evolution and theories, then advances the basic hypothesis and measurement models. It analyzes the situation of listed enterprises, investment using the model from Richardson, if the model residual is positive then the enterprise exists over-investment, otherwise the enterprise exists under-investment. When to explore the relation between soft budget constraint and enterprises, over-investment in different properties, the paper chooses an indicator from Lin Yifu to measure the level of soft budget constraint that is the difference value between the ratio that interest expense divided by the debt and the industry average, when the difference is less than zero indicates that the enterprise has a higher level of soft budget constraint than the same industry enterprise; otherwise when the difference is more than zero indicates that the enterprises has a lower level of soft budget constraint than the same industry enterprises.Through empirical analysis, we can find: most listed enterprises exist soft budget constraint and over-investment is more serious; the ratio of liabilities to assets and the over-investment exists a positive correlation relationship confirms in our country the listed enterprises exist soft budget constraint nature both state-owned and non-state-owned; In the sample of state-owned, the regression results also showed that the level of soft budget constraint and over-investment existed a positive correlation relationship confirmed that the state-owned enterprise under soft budget constraint would significantly promote the over-investment; however, in the sample of non-state-owned the regression results can not show that the non-state-owned enterprises under soft budget constraint would significantly promote the over-investment, although it has been proved existed soft budget constraint.Finally, according to the empirical research, based on the relevant theory and empirical analysis this paper puts forward five suggestions to make the government and enterprises to understand soft budget constraint correctly, providing a good reference to improve the problem that enterprises under soft budget constraint would significantly promote the over-investment.The innovation of this paper lies in: choosing the year between 2010-2013 as the range, so it can reflect the boom state of investment after the economic crisis really and effectively; and in the article, we bring non-stated enterprises into the research object of soft budget constraint, study the relation between soft budget constraint and enterprises, over-investment through the method of empirical analysis, that is more adapt to the current economic situation and making the theory of soft budget constraint more and more complete.