The Impact Of Ownership Concentration On The Ineffective Investment

Modest ownership concentration can make large shareholders have incentive and ability to supervision enterprise managers, relieve agency costs between the owners of the enterprise and the administrators. At the same time, ownership concentration stock’s reduced liquidity and diversity, the large shareholder has power and ability to plunder small shareholders’ interests and transfer of enterprise resource, will create the private incomes of control, as the same time will cause the agency problem, eventually led to the enterprise cost of capital increase and a decline in the value of the company. In this paper, I based on the principal-agent and corporate control theory, analyzed the overall status of the distribution of the equity of listed companies, incorporate with the governance structure and the executive incentive of listed companies in each case, explore the interrelationship of ownership concentration ratio and the efficiency of investment. This paper used some research methods for instance empirical research, first of all system complete reviewed the related literature at home and abroad, expounded the relevant theories of corporate governance and investment theory, proposed my assumptions and conceptual models.And then to analyze our country listed company equity concentration condition. At last, through the empirical research to test the relationship between ownership concentration and efficiency of investment, and executive incentive as adjust variable effects on relationship above.This paper selected 675 enterprises which are listed in shanghai and Shenzhen Stock Market, 2011-2013 three years of record as the research samples. First of all, in terms of measuring ownership concentration, Combination of Hector fender index and Checks and balances, considered the top shareholders due to the different nature of the equity and weaken the ownership concentration. The second, add executive incentive as adjust variable to the interrelationship of ownership concentration and efficiency of investment, enrich the ownership concentration and the efficiency of investment research. This paper examined the interrelationship of ownership concentration and efficiency of investment, and in regulating variable executive incentive under the intervention of the changes of the interrelationship of the two. The empirical results show: positive correlation between ownership concentration and the efficiency of investment relations; executives shareholding in a certain extentweakened the negative correlation between ownership concentration and the efficiency of investment relations; executive compensation has no effect on the ownership concentration and efficiency of ineffective investment’s negative correlation. Overall, ineffective investment problems are widespread.Finally, on the basis of my research, proposed some relevant suggests and policies, summarized the insufficiencies of this study, discussed future direction of research in this field. Hope to provide certain basis for the investment decision of listed companies.