Enterprises’ Control Hierarchy 、growth Option Investmen And Firms’ Value

With the proceeding development of the market reform in our country, the government’s intervention in enterprises and corporations has weakened gradually. Thus enterprises pay more attention to build their own core competitiveness and enhance their ability to manage the business. The tendency to focus in market requires corporations enhancing the ability to respond to change in market quickly in a higher degree.Under the background of marketization in our country, Enterprises will face greater management and decisions making risk. To make a reasonable strategy is great of significance for enterprises, to occupy the market and develop quickly and stably, enterprises invest in the strategic growth options and this is main content of what they do. Enterprises take the main place in technical innovation of our nation. To boost the economic stability and get more growth opportunities & innovation energy, improving the conditions of investment in growth options for enterprises is very vital. We are confronting these puzzles: facing the more and more complex international and national economic environment coupled with current primary situation of our enterprise “adapting to market”, what kind of control hierarchy structure has more flexibility and is more suitable for investment in growth options? Are current listed enterprises’ hierarchy structures beneficial for investing in growth options? Can the matched relationship between the set of control hierarchy structure and investment degree of growth options increase the value of firms?This paper tries to research the relationship between the growth options investment and the number of control hierarchy, it also researches the efficiency of hierarchy—the impact of interaction about RDI(the agency variables of growth options) and hierarchy on firm’s value. The paper leads to the theme from the cases, elaborating the theories about the allocation of control, RDI and firm value. It takes the sample of 2006-2013 listed firms(excluding the finance and insurance firms), makes an empirical research in the relationship between firms’ control hierarchy and investment in growth options, it finds that: Firms that invest more in growth options are more clined to choose a more independent organization,so as to rapidly response to the market signals and technological change.In different industries the relationship between the number of control hierarchy and investment in growth options differs, IT has the highest level of technological innovation and is the most flexible industry in the country at present.Reduce the hierarchy and make more growth option investment can increase the value of the firm, particularly for the IT industry. But manufacturing industry is not the case, this may be because the manufacturing industry need to take into account the various interest on the chain of the control hierarchy, the peenomenon is relate to the reform of stateowned enterprises. Finally, the hierarchy of the stateowned enterprise has not been reduced, it shows that the organizational flexibility of stateowned enterprise is not so good.