Effects Of Manager's Political Connections On Inefficient Investment Of China's Listed Companies

Investment plays a vital role in stimulating the economic growth of the country. However, at the same time, the inefficient investment behavior of the enterprises is becoming the problem that the enterprises are facing. Especially is in under the background of economic system transition in China, market system environment and the legal system is not perfect, as the invalidation of market and legal system is a positive response, enterprises seeking political connections and the government of listed companies has become the common phenomenon. The nature of property rights as China's listed companies seeking the intrinsic motivation of political connections and the cash flow as management of political connections on the effect of inefficient investment intermediate variables, comparison of different property rights management layer associated with the political impacts on the corporate inefficient investment differences, inspection management political connections on inefficient investment of enterprises effect, to improve the fair competition in the market mechanism, legal system and strengthen the investment environment and has practical significance.This article first to the management for defining political connections and the inefficient investment, to the inefficient investment and management on the relevant theories of political connections to comb, and through analysis of the system background of our country, the political connections influence the efficiency of the enterprise investment management theory analysis and put forward the corresponding assumptions, then based on 1010 Chinese listed companies between 2007 and 2012 panel data, the different nature of the property management under political connections impact on the inefficient investment and the difference has carried on the empirical research. The results show that:the management political connections can reduce the enterprise's cash flow under investment and over investment phenomenon, and its ease of inadequate investment effect is stronger in the ease of excessive investment effect; at the same time, private enterprises management political connections reduce inefficient investment behavior is stronger than that of the state-owned enterprises (local state-owned enterprises and state-owned enterprises), local management of state-owned enterprises political connections reduce insufficient enterprise investment behavior is stronger in the central state-owned enterprises, but for the effects of over investment behavior does not have the difference. Based on the above results, this paper puts forward policy suggestions for reducing the inefficiency investment behavior of enterprises from the perfection of the market mechanism and the relevant legal background and reduce the government intervention..