The Influential Factors Of Inefficient Investment And Its Impact On Corporate Value Of Listed SMEs

In the theory of financial management, investment decisions as the starting point of financial decision, causing profound effect on the financing decisions and dividend policy. Investment decisions are the key point of corporate value, but inefficient investment tends to make the enterprise deviate from the goal of maximizing the enterprise value. Compared with investment research on investment efficiency of primary industries listed companies or large listed companies, we choose the listed small and medium enterprises in this paper, which have already gained much attention by society and academia because it have an excellent prospect in the future. To found when the listed small and medium enterprises use the free cash flow to invest, whether their investment is inefficient investment behavior and whether the inefficient investment behavior could damage corporate value.The relevant data is selected from 2012 to 2014 about listed small and medium enterprises. In the first, referring to previous studies of the investment model, estimated the modest investment and inefficiency investment of listed small and medium enterprises. Through the model prove that there has the inefficient investment behavior on the listed small and medium enterprises, which are overinvestment and underinvestment. In the second, according to the previous studies of free cash flow, through establish relevant model variables, examined the correlation between overinvestment and underinvestment and free cash flow. The results show that:the inefficiency investment is a common problem in the listed small and medium enterprises, and underinvestment is more serious than overinvestment, free cash flow is significant positively related to the overinvestment behavior and free cash flow is significant negatively related to the underinvestment behavior. The result is consistent with the previous studies. Next to prove whether inefficiency investment would damage the corporate value, and the result shows that inefficiency investment activity which is overinvestment behavior and underinvestment behavior are significant negatively related to the enterprise value. In the end, to make the full use of free cash flow and improve corporate value, the implications of this study is that to promote the relevant system construction and supervision mechanisms, improve the small and medium-sized enterprises' environment of investment, and promote the effectiveness of the company's investment activities.