A Study On The Impact Of Financial Structure Of Chinese Listed Manufacturing Companies On Inefficient Investment

Over the past twenty years, China’s securities market has developed rapidly. It provides a strong support for the financing arrangement of the listed manufacturing companies. It also promotes the continuous expansion of the scale of China’s listed companies. The problem of financial structure is still a topic that attracts attention of many scholars in the world. Some scholars have found that the investment activities in many companies have not reached the optimal level. The inefficient investment behavior, which is often found in the course of business, called lack of investment and over investment. But there is perfect conclusion about this problem. Whether the investment really achieve the goal of maximizing shareholder’ wealth, is still to be further analyzed. Some related research shows that the form of financing will affect the investment benefit of enterprises. Enterprises are more inclined to debt financing rather than equity financing in external financing. This paper attempts to start from the analysis of the cross correlation of financing and investment, to explain the relation between the financial structure and the inefficient investment in the listed manufacturing companies and its influencing factors.This paper studies the problem mainly from three aspects. On the one hand, according to the different types of ultimate control over the listed manufacturing, companies in China can be divided into two major categories of state-owned and non-state-owned. According to the existing relevant research literature, we can explore the cross correlation between financing and investment. On the other hand, on the basis of descriptive analysis, we can research the relationship between the financing structure and the inefficient investment, establish a multivariate regression model.Through theoretical analysis and empirical research, the conclusion of this paper is as follows:First, from all the variables of financing structure and investment correlation analysis results, it can be seen that at the same time, current liabilities, non-current liabilities, shareholders’ equity, retained earnings and capital stock and the level of the company’s investment has significant positive correlation. Compared to the non-state-owned listed companies, the investment level, equity financing, retained earnings of state-owned listed companies have higher correlation between the capital stock, this shows that financing characteristics of different types of listed companies exist differences.Second, according to the analysis on the inefficient investment of Chinese listed manufacturing companies, the empirical results show that the Chinese listed manufacturing company as a whole exists the phenomenon of inadequate investment, from the samples evaluated found in 2006, the company’s investment level is relatively low, the degree of lack of investment is larger, at the same time the state-owned and non-state-owned listed companies’ investment behavior showed obvious difference.Third, As a whole, the different financial structure of listed manufacturing companies in China has a certain effect on the inefficient investment behavior. From the regression analysis results, current liabilities and the efficiency of investment has significant negative correlation relationship, this shows that the short-term debt can inhibit the inefficient investment behavior of listed companies, rather than the current liabilities for the investment efficiency of binding is relatively weak.