An Empirical Study Of The Relationship Between Fixed Assets Investment And Corporate Performance

As one of the enterprises’basic activities, investment not only influences the companies’ own growth and development significantly, but also ensures a steady and healthy development of national economy during the process of economic growth. Because of the fixed assets’high value, they occupy a large proportion of total assets. So it is of great significance to increase the efficiency of investment in fixed assets and improve the business performance finally. Since 2009, our country has treated increasing investment as an important means to tackle the financial crisis and stimulate economic growth. Driven by government investment, enterprises’fixed assets investment has shown rapid growth. Therefore, it is necessary to study the relationship between the fixed assets investment and corporate performance since financial crisis.Starting from the mechanism analysis of fixed assets investments’influence on corporate performance and based on the existing literature, this paper puts forward some hypothesis and attempts to use empirical analysis to inspect the relationship between the fixed assets investment and corporate performance and the differences made by holding position and equity properties of the largest shareholder.This paper selects 511 manufacturing companies listed before 2007 in Shanghai and Shenzhen Stock Exchanges, the empirical results are as follows:(1)There is a significantly negative relation between the fixed assets investment and corporate performance in general.(2)When divide the sample into three groups based on the ratio of the largest shareholder, we find the negative impact of fixed assets investment made on corporate performance in absolute control companies is smaller than relative control.(3) When divide the sample into two groups based on the equity properties, we find the negative impact of fixed assets investment made on corporate performance in private enterprises is smaller than state-owned enterprises companies.Finally, this paper analyzes the empirical results briefly and makes some political recommendations on the fixed assets investment.