Study On The Relationship Of Large Shareholder Control And Investment Efficiency Of Listed Companies

Investment decision is an important part in listing company’s many decisions. Whether the decision is efficient related to the financial situation of the company. Recently, the law situation and the corporate governance have been improved. But there are still many problems. Firstly, the large shareholders control are widely existing. The phenomenon of large shareholders control widely exist in many country, China is no exception. In China the average shareholding of the largest shareholder is 31%; and the relation shareholders’ is more than 50%. Secondly, the efficiency of the investment is different. Many corporation operation is very well before listing,but over investment or insufficient investment are serious existing. This may be due to the company cater to the investors’ preference. And this leads to the large shareholder irrational expansion the scale of company or over diversification. Or tunneling the company by personal purpose and own interest. These situation caused the inefficiency investment.This paper select private companies of 2010-2014 year as research sample. Describing the large shareholder control from the concentration of equity and balance, the situation of ultimate controller, the relation shareholders perspective, the paper discuss the relationship of large shareholder control and investment efficiency. Meantime, further discuss the moderating function of the financial decision. The research found, the largest shareholder cannot influence on the investment efficiency lonely. But the top five or ten shareholders have a significant influence on the investment efficiency. From the equity balance angle, whether describe using the Z index or the S index, will have a significant influence. The study about the right of cash flow is consistent with the existing research. But the right of control and the relation shareholder have a significance influence on the investment efficiency. The further study on moderating function of financial decision found, the large shareholder leads to loss of the investment efficiency when the debt existing. This may be caused by the governance function of the debt.