Research On The Impact Of Internal Control And Media Attention On The Over-investment Of State-owned Enterprises

After the financial crisis of 2008, the government launched an economic package which contains "4 trillion yuan" to stimulate investment,95 percent of these funds flowed into Chinese state-owned enterprises, which reveal the sequelae of the economic plan such as "expanding impulse", "hungry investment" and "inefficient investment", resulting in a serious excess capacity. "The Belt and Road" is a good ways to solve the overcapacity problem, but it cannot fundamentally solve the problem of over-investment. So, it is very important to solve the problem of Over-investment. In China, the ownership structure of single-largest-shareholder and the absence of owners lead to a serious internal control problems in state-owned listed companies, which provides essential room for management level’s opportunism. Facing the phenomenon of "High-investment& Poor efficiency", companies badly need to look for an effective method to solve the problem.This article try to study the influence of the internal control and the media governance to Chinese state-owned enterprises by the point of view which combining the companies’internal and external, and further checkout the interaction between the internal control and the media attention. Result shows as follow. First, a high-quality internal control can formed an interaction and mutual supervision mechanism, which can effectively restrict state-owned enterprises’over-investment. Second, the media supervise the state-owned enterprises’investment decision-making and implementing behavior by reputation mechanism and supervisory mechanism, which can make sure that those decision made under an open and transparent environment, thus to curb the blind investment behavior. This paper further considered the different types of media governance effect. That is difference between market-oriented media and policy-oriented media. The policy-oriented media can effectively restrict state-owned enterprises’expansionary investment, while market-oriented media has no significant effect to the investment level. Third, the internal control and the different types of media report is not a simple single relationship. On reducing the state-owned enterprise’over-investment, the need to further improve the internal control. At the same time, it is also considering the media attention, according to the different circumstances and enterprise situation to choose the most reasonable governance mechanism for corporate.Finally, according to the theoretical analyze and empirical results, integrate the state-owned enterprise’s current situation and government’s work guidance, this paper put forward several advices and suggestions on reforming state-owned enterprises, meanwhile try to explore a new way to solve over-investment problem.