Ultimate Nature Of Shareholders And Inefficient Investment

Nowadays, the rapidly developing market economy has make investment increasingly becoming an important part of the enterprise resource allocation.Investment decisions is the extremely important part of corporate decision-making, so that the investment efficiency situation of every company is the topic that corporate management, investors, creditors and the government of common concern.In China, there are about 70% of the listed companies whose ultimate shareholder is the state, enterprises have the dual goals of profit maximization and social benefits, and also easier access to policy or financial support. And if the corporate whose ultimate shareholder is the non-state, there will be more financial trouble. Both in business goals, the degree of government intervention, and the various aspects of corporate governance are not the same, so there will be a different performance in their ineffficient investment.In order to the further study of the effects of different corporate ultimate shareholder on inefficient investment, the article is divided ultimate nature of shareholders into state and non-state firstly, then further divided a large proportion of state-owned enterprises into the central government holding and the local government holding, detailedly study of the specific differences in the different nature of the controlling shareholder on the performance of inefficient investment.The external environment will have the behavior of corporate investment and their investment effects of a certain influence. In our country, the market environment is quite different in various regions, the market process research become an important environmental background of the research of firm characteristics. In a high degree of market areas, the better of financial intermediaries and legal environment could reduce the company’s inefficient investment; in the low level of marketization, there is no policy support so that the corporate financing is more difficult,needless to say investment,and those may make the inefficiency of state-owned firms and non-state firms a greater difference between their investment.The manufacturing firm accounting for a large proportion in China’s listed companies, the study of investment efficiency of manufacturing companies with higher comparability and strong representation. This article will use all manufacturing listed companies as a sample, and research the influence of the ultimate ownership of the firm to their inefficient investment and added the market-oriented process factors to study its effect on the relationship between the two, then build several models to tested the impact of ultimate shareholder nature to inefficient investment, and the market factors how to affect their differences. The conclusions of this paper are as follows:(2) The investment efficiency of state-owned enterprises is higher than that of non-state-owned enterprises, but their over-investment problem is more serious, and the non-state-owned firmes is more serious problem of under-investment; compared to central government control of state-owned firms, the efficiency of firms run by local government is lower, because they have more overinvestment problems. (3) Market process factors have a regulating effect on the difference of inefficient investment which bring from ultimate nature shareholders, for example, in an area of a higher degree of market, the difference of inefficient investment between state-owned enterprises and non-state-owned enterprises is reduced, and the problem of underinvestment difference is significantly reduced. And in an area of a higher degree of market, the differences of over-investment between the two will be reduced.The main contribution of this paper are as follows:(1) a more comprehensive study of the influence of the ultimate shareholders of inefficient investment, not only divided into state-owned and non-state-owned, and the state-owned enterprises to further categorized as central controlling and local centraling, and reserach the different manifestations of inefficient investment between the state-owned firms and non state-owned firms, and between the central holding and local holding companies. (2) This article added factor of the market process, to explores the regulating effect of the market process to the relations of the nature of ultimate shareholder and inefficient investment, thereby deepening the study of the aspect of the external environment impact on corporate investment behavior. (3) The research and several conclusions of this paper enriches the theory of inefficient investment,which has a good practical reference to improve the efficiency investment of all firms.