| In October 2013, the State Council issued the guiding opinions on resolving the serious oversupply of capacity in China, it pointed out that currently serious overcapacity problem existed in many industries such as electrolytic aluminum, steel, flat glass, shipbuilding and cement. One of the main reasons leading to overcapacity is that some managers in the companies are blindly optimistic about the future market, thus the managers make a large number of over investment, which leads the expansion of production capacity. Therefore, it is urgent to restrain the over investment behavior of enterprises. Financing decision and investment decision are the two most important decisions, which play an important role in the survival and development of enterprises. Many domestic and foreign scholars have studied the relationship between them. Some scholars have found that the liability of the enterprise can effectively restrict the over investment behavior of the managers by alleviating the principal-agent conflicts between the shareholders and managers. At the same time, with the continuous development of the institutional investors, they begin to play a more and more important role in corporate governance. Institutional investors have impacts on both investment decision and financing decision, and then effect the enterprise’s over investment behavior. This article hopes to analyze the two different kinds of external governance mechanism, and to explore the interaction between them, then provide some suggestions for the enterprise’s investment decision and the development of institutional investors in the capital market.The combination of normative research and empirical research is adopted in this paper. Firstly, this paper summarizes the researches and relevant theories on the institutional investors, debt financing and over investment of domestic and foreign scholars, so as to find the direction of this paper and put forward the theoretical hypothesis. On this basis, this paper takes all of the A-share listed companies during 2007-2013 as the research sample, and takes the over investment model of Richardson (2006) as the basis for the measurement of the non efficiency investment. In this paper, we focus on the study of the listing Corporation’s over investment behavior, take the over investment as the explained variable, institutional investor and liabilities as explanatory variables. Then build the model of interaction between institutional investors and liability to study the relationship among the liability, institutional investors and over investment.The research indicates that (1) the debt can effectively restrain the over investment behavior of the managers. (2)It is found that short-term debt can effectively restrict the enterprises’ over investment behavior. (3) Institutional investors can effectively reduce the over investment behavior by participating in the corporate governance. (4)As two governance mechanism of over investment, the institutional investors would significantly reduce the constraint effect of debt on the over investment. So the institutional investors and debt are alternative relations on the constraint of over investment.Under the background of the general existence of over investment in our country, the two kinds of governance mechanisms, the debt and institutional investors, have important practical significance. Based on the conclusions, the paper finally puts forward some policy suggestions, hoping to provide some reference for the enterprise in the governance of over investment. |
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