Market Process-Risk Appetite And Investment Effects

Mining companybelongs to basic industry in a country, thus improving the investment effects of mining companies means great significance to maintain a continuous supply of resources, as well as promote the sustainable development of society. According to the data of Ministryof Land and Resources, mineral production still cannot meet consumption growth, though mineral reserves and exploration investment continue to grow. At the same time, the overheated investment, blind development and redundant construction phenomenonof mineral resources are common. Due to the special featureof mining industry, it faces more uncertain factors which can affect its risk appetite.Moreover, risk appetiteof mining enterprisesaffect the investment decisions. Therefore, understanding the type of risk appetite of the mining companies, as well as the link between risk appetite and investment effects at different market process levels can help mining companies do more conductive and reasonable investment decisions, thereby to increase the effect of mineral resources investment and ensure continuous supply of resources, as well as promote sustainable development of society.In this research, therisk appetite degree of mining companies was assessed by VAR model using the mining companies listed in Shanghai and Shenzhen stock markets from 2008 to 2012 as samples. By using the investment efficiency of mining companies as explained variable and employing risk appetite as explanatory variables, the multiple regression was carried out with enterprise assets scale, enterprise position and asset liability ratio etc. as control variables. The results show that there is a significant positive correlation between investment efficiency and risk appetite in mining companies. And this positive relationship in the process of rapid regional market is more significant when the model considered the marketization index variable, which means the risk appetite of mining companies will improve its investment efficiency more significantly. The results described in this paper show that the investment efficiency of risk-based companies is more significant than risk-avoidedcompanies. Moreover, the degree of resources endowment and marketization impact the relationship between risk appetite and investment efficiency of mining companies. In the mineral-rich Midwestor high degree marketization areas, the positive relationship between risk appetite and investment efficiencyof mining companiesis more sensitive to that in the eastern region or the low degree marketization areas.Under the globally configured resources and markets,investment decisions of mining companies should be made with the consideration of its own risk appetite, market-oriented, resource endowments and other factors. Mining enterprises should attach importance to establish and perfect the enterprise internal risk control system which will play the role of guiding and constraining mining enterprises’ activities. The government should improve and perfect the laws and regulation of mineral rights, limitation of land use, the collection of taxes and so on.So as to ensure the sustainable development of mining enterpriseand meanwhile improve the investment efficiency.