The Loan’s Influence On Investment Efficiency Of Listed Company

Loan is the main financing channel for companies in china and investment is the basis for enterprises to survive and develop.As a scarce resource,can Loan funds really improve the investment efficiency of listed companies? On the one hand, obtaining Loan can bring new cash flow for enterprises to alleviate the financing constraints.On the other hand, Loan has two sides for agency problem.It can cconstrain the behaivior of managers to govern the agency conflict.But the excess cash flow also exacerbate the problem of agency between shareholders and Loanors.As a result,the limited Loan resource is abused,making the investment efficiency lower. My article want to anylise the differences between the listed companies of shortage investment and excessive investment embarks from the investment- cash flow sensitivity.In addition,this article also anaylise the causes for the differences. Mainly for two aspects: financing constraints or agency problems.In this paper, I choose the listed companies which issue A-share between year 2002 to 2013 as observations to empirically verify the influence of Loan. The empirical results show that, in general, accessing to Loan funds really improving the investment efficiency of listed companies.But the lines of Loan did not exert significantly influence on investment efficiency of listed companies. Respectively considered inadequate investment and excessive investment, we find that Loan reduce the sensitivity between the insufficient investment and free cash flow by alleviating the financing constraints. Unexpectly,It do not aggravate the agency problem in some extent for seriously excessive investment samples. The governance effect of debt and Loanors’ supervision may explain the result. Firstly,we eliminate the differences between groups by Propensity Score Matching. Then verifying the effect of Loan based on economic nature and industry growth. We found that the role of Loan on the investment efficiency is not related to industry growth present linear. besides, the impact on the state-owned listed companies about excessive investment is not as significant as people’s imagination.Propensity Score Matching overcomes the endogenous problem and sample selection bias well, illustrating Loan really influence the investment efficiency of listed company. At the same time, the article respectively discussing the correlation between underinvestment-cash flow and excessive investment-cash flow.We research the effcts of Loan by two types of investment efficiency and deeply analysis the causes of the differences,having significant means for the listed companies, Banks and government. At the same time, this article is a research based on transition economy, depending on special chinese background, makes up for the related research on investment efficiency.