Research On The Capital Allocation Efficiency Of Listed Companies In China Based On Industry Perspective

The stock market is an important part of financial market. It plays an increasingly important role in the economic development in China. As an essential way of resource allocation, the stock market not only allocate the incremental capital by means of financing, but also deploy the stock capital through mergers, acquisitions and restructuring. On the one hand, the stock market promotes to wide financing channels of the listed companies, which can further optimize the allocation of resources. The stock market has made great contributions to promote China’s real economy steadily and rapidly by spreading multiple risks in the whole market. On the other hand, under the premise of abundant sources of funds and financing means, there are listed companis which are led to inefficient situations. Therefore, under this background, it is particularly crucial to explore the capital allocation situation of listed companis in China. In this paper, based on the perspective of the industry, we will study about capital allocation efficiency of listed companis in the stock market. What is more, factors that affect the efficiency of the capital allocation of listed companis are empirically tested.In order to research on stock market mechanism of capital allocation, we first elaborated the different ways of financing evolution and characteristics of financing in the stock market. Then we expound the reason why the efficiency of capital allocation is forned. According to the model that Wurgler (2000) uesd to estimate the efficiency of capital allocation, the thesis calculates the listed companies capital allocation efficiency from the perspective of industry which is divided into labor intensive, technology intensive and capital intensive. Also we calculate annual efficiency of capital allocation of the listed companies and the spontaneous investment level of different industries in the stock market. Results show that there are significant industry characteristics about the efficiency of capital allocation of the listed companies. For the sake of researching on the market and institutional factors that affect the efficiency of capital allocation of the listed companies, we make an empirical test which suggests that the index of financial market development, the index of stock market developmentand and the institutional factors affect the efficiency of capital allocation in varying degrees. Finally, according to the conclusions, suggestions are given to enhance the efficiency of capital allocation of China’s listed companies in the stock market.