Ownership,political Connection And Investment Efficiency

Investment, as one of the three carriage of China’s rapid economic growth, has made great contribution to the development of china’s economy and society. The study of enterprise investment efficiency can analyze the validity of the enterprise investment behavior, and it is good for the manager to make scientific investment decisions.At present, inefficient investment of Chinese enterprises is still widespread,the situation of insufficient investment and excessive investment seriously restricting the healthy development of our country’s economy. Finding effective measures to improve the investment efficiency of enterprises has become an urgent task.Along with the advancement of wave of Merger and Acquisition(M & A),as an important strategic tool, M & A has gradually attracted researcher’s attention. M & A is an important part of modern enterprise investment, and it is of great significance to put it into consideration when study the efficiency of investment behavior. For now,researches on the correlation of investment’s efficiency and M & A are rare.As internal and external governance factors of enterprise,ownership and political association will make certain effect for enterprise investment.Before, there have been some studies in this filed. However, the studies has never considered in the context of M & A and studied the effect of the two factors on the investment behavior.What effect will M & A make on the efficiency of enterprise’s investment, and what’s the performance of efficiency of enterprise’s investment when considering ownership and political connection? The study of this problem can expand the exploration of investment efficiency, but also can provide advice for enterprise to participate in M &A.The purpose of this paper is to study the change of investment efficiency before and after M&A,and the effect of two different corporate governance modes(ownership and political connection) make on the change.Firstly, this paper reviews and comments the domestic and international literature on the efficiency of investment,M&A performance and political connection, establishing the change of the level of inefficient investment before and after M&A as the perspective of this paper.Then this paper analyzes the correlation among ownership, political connection and the change of the level of inefficient investment before and after M&A basing on rent-seekingtheory, government intervention theory, over confidence theory, cooperative effect theory and information theory,and put forward test hypothesis.Empirical research mainly includes four aspects: first, analyze the change of investment efficiency before and after M&A;second, study the effect of ownership on the change of investment efficiency before and after M&A;third,study the effect of the political connection on the change of investment efficiency before and after M&A;fourth,analyze the effect of the political connection on the change of investment efficiency for different ownership enterprises before and after M&A.Through empirical study, conclusions of this paper are the following: first, the degree of non efficiency investment has been significantly improved after M&A.Second, the degree of non efficiency investment in state-owned enterprises hasn’t been improved significantly,however,the degree of non efficiency investment in no-state-owned enterprises has been improved significantly. Third,the degree of non efficiency investment in the enterprise with political connection has been improved significantly. Fourth,the degree of non efficiency investment in state-owned enterprises with political connection hasn’t been improved significantly,however,the degree of non efficiency investment in no-state-owned enterprises with political connection has been improved significantly.