A Study On The Impact Of Factors To Over-Investment

The investor protection index in 2011 shows that the level of protection of Chinese investors in listing Corporate fell, the main reason is that the issue of excessive investments is very serious. There’re a lot of factors that affect the excessive investment, and the factors can be roughly divided into corporate governance, ownership structure, characteristics of management, characteristics of enterprise finance and external governance mechanism.This paper studies by the way of combining theoretical analysis and empirical test to research the influence that some factors which are belong to the corporate governance, the ownership structure, the management characteristics, characteristics of enterprise finance and the external governance on the enterprise excessive investment. First of all, this paper combs the related theory of excessive investment and reviews the related conclusions, and then puts forward the research hypothesis of this paper. Then, choose the research variables, and build the model for empirical analysis. In this section, choose relevant data from the non-financial firms listed in the Shenzhen stock exchange over the period from 2010 to 2012, by using descriptive statistics, the correlation analysis and multiple linear regression analysis to test. Firstly, we estimate the normal level of invest by using the experience of the model of Richardson (2006), Xin Qingquan and so on(2007), and then, making the difference between the enterprise actual levels of investment and the estimation of the normal investment levels (regression residuals) be the represents the degree of excessive investment (residual is greater than zero), so we can get the samples, which residual is greater than 0, of the following empirical research. Subsequently, the over-investments which are estimated will be the explanatory variables, and we can work out the linear regression about the over-investment and the relevant control variables. This part include linear regression research on every aspect and all factors integrated and the comparison of difference between information technology industry and non-information technology industry. Finally, according to the result of empirical research, we will draw some conclusions, put forward a number of recommendation and the limitation of this article.The results of this study indicate that it’s different when take the five aspects-corporate governance, ownership structure, characteristics of management, characteristics of enterprise finance and external governance mechanism together from considering each aspect separately, namely the influence of some factors on the excessive investment was less. In this case, the separation of chairman and manager, ownership concentration and the asset-liability ratio have a significant positive correlation with the over-investment. The proportion of independent directors and the quality of information disclosure will play a significant negative role toward the over-investment; and the first big shareholder shareholding between excessive investment and significant inverted "U" shaped relationship still exist.