The Influence Of Financial Reporting Quality And Debt Maturity Structureon The Inefficient Investment Of Listed Companies

Efficient investment is one of the most important financial decisions for the enterprise. Efficient investment contributes to the basis of the company’s future cash flow,which can stabilize the company’s financial situation, thus, reducing the company’s financial risk. Meanwhile, efficient investment, as the key economic factor allocating social resources, also offers heavy support for economic growth by stimulating social consumption and increasing employment.However, the serious problems resulting from inefficient investments are frequently encountered in development with a great of social resources wasted, so it is necessary to carry out studies to resolve them. Previous research has shown that the financial information and debt structure, to some extent, could affect the investment decision of enterprises. Considering that financial reporting quality is strongly associated with debt maturities, studying on the impact on listed companies’ inefficient investment of financial reporting quality and debt maturity structure is vital. This paper first analyzes the relationship among the financial reporting quality, debt maturity structure and inefficient investment, then proves this relationship by adopting empirical methods, and finally validates the robustness of the conclusions.This paper reviews the relevant literature about financial reporting quality, debt maturity structure and efficiency investment, then analyzes the inefficient investment in terms of the principal-agent theory, free cash flow theory, financing constraints and asymmetric information theory. After this, we select the A-share listed companies of Shanghai and Shenzhen Exchanges between 2008 and 2013 as samples, the level of earnings management as the substitute alternative variables of the financial reporting quality, the proportion of current liability and total liability as substitute variables of debt maturity structure, and then use the residual of Richardson residual model as the substitute alternative variable of inefficient investment to construct the model of multiple regression which analysis the relationship among the three variables. Finally, we use the smoothness of the surplus instead of earnings management level as the substitute alternative variable of financial reporting quality, and further validate the robustness of the conclusions.The study result shows: The problem of underinvestment is more serious than that of overinvestment in Chinese listed companies between 2008 and 2013. The correlation between quality of financial reporting and inefficient investment is negative: the lower financial reporting quality is, the more serious problem of inefficient investment is. The debt maturity structure is negatively related to inefficient investment. The higher the ratio of short-term debt, the weaker inefficient investment level is. Debt maturity structure will reduce the effect which financial reporting quality imposes on the inefficient investment: the higher ratio of short-term debt, the weaker the relation between the quality of financial reporting and inefficient investment is. Financial reporting quality will weaken the effect which debt maturity structure has on the inefficient investment: the higher quality of financial reporting short-term is, the weaker the relation between the debt maturity structure and inefficient investment is. This study reveals the inefficient investment motives of Chinese Listed Companies, and plays an important role in improving efficiency investment from enhancing financial reporting quality, optimizing the debt maturity structure.