Research On Effects Of Corporate Investment Efficiency On It’s Performance And Value

In recent years, China’s economic development is relatively rapid, in which the role of investment cannot be ignored, however, due to defects in corporate governance and market regulation, investment inefficiency is widespread in the enterprise.Investment is a key activity of the enterprise, has an important influence on the enterprise’s survival and development, reasonable investment decisions can reduce costs, improve corporate earnings and maintain the sustainable development of enterprises. The enterprise irrational investment decisions will result in inefficient investment, and effect the macroeconomy and micro enterprise performance and value.Firstly, based on theories of asymmetric information, agency, free cash flow hypothesis and behavioral finance, we analyze effects of investment efficiency on company’s performance and value and its mechanism, and then propose hypotheses based on the theoretical analysis. We choose Shanghai and Shenzhen Main Board and GEM listed companies from 2011 to 2015 as sample data in empirical part, through the theoretical model of investment efficiency, obtaining the investment efficiency of the sample company the results indicate that investement inefficiency of China’s listed company is widespreadly low,and through theoretical model of new increased investment we identify the important factors that affect the efficiency of investment.Followed by further empirical test of the impact of investment efficiency on GEM board listed company’s performance and value, the test results show that both overinvestment and underinvestment have significant impact on the company’s performance and value, but the impact direction inconsistent. Finally, in order to increase the credibility of the above empirical results, this paper also carried out robustness tests, test results further validate the conclusions of the foregoing.Then, based on the results of empirical research, we compare and analyze the investment efficiency conditions of Board and GEM markets, then compare the conclusions about effects of investment efficiency on company performance and value.Finally,based on the conclusion, on how to improve the company’s investmentefficiency so as to enhance performance and value of corporate, we made the following recommendations: The first is scientific and rational planning of investment activities; the second is focusing on important factors affecting the efficiency of investment;the third is improving the GEM listed company’s internal operation mechanism and external constraint mechanism; the fourth is improving the information disclosure mechanism and market supervision.