Research On Analysts Following,Separation Of Two Rights And Firms’ Over-Investment

It is favorable for the promotion of the enterprise value, while making the correct investment decision, however, investment behaviors are distorted heavily in some degree, and a large amount of inefficient investment behaviors exist, causes enormous distress. Because of the equity concentration of listed companies in China, shareholder groups divided into two interest groups: controlling shareholders and minority shareholder. Split-share structure and high equity concentration ratio are one of the most important factors for leading to these results. As important players of securities market in China, security analysts’ behavior has great impact on securities market and investors. Analysts help to reduce information asymmetry in the securities market by providing investors with information about the market, industries and firms. By relieving information asymmetry, analysts help improve liquidity of the stock and market efficiency, nevertheless, reasonable skepticism and due care are important concepts which analysts always use in the practice. But the present situation of our country professional service organization is on small scale, the service quality is not high, this approach conflicted with the platform independence, objectivity trait of the analysts, thus cannot effectively develop supervisory function. Prior studies have found that whether the divergence between the control rights and cash-flow rights of the firm’s ultimate controller will aggravate the degree of over-investment, or considering the legal system environment, the nature of the property, and protect small and medium shareholders, ignoring the role of analysis. It will be necessary to study whether the divergence between the control rights and cash-flow rights of the firm’s ultimate controller will aggravate the degree of over-investment, but how, in the meantime, should we approach the analysts.We collect the data for the listed companies of Shanghai and Shenzhen in China from2012 to 2014.we find that divergence between the control rights and cash-flow rights of the firm’s ultimate controller will aggravate the degree of over-investment, particularly in this operation of analysts; when considering the nature of equity, we found that compared with non-state-owned enterprises, analysts follow exacerbated the positive effect the separation of ownership for enterprise overinvestment in the state-owned enterprises; after further distinguish the central enterprises and local state-owned enterprises, we find in comparison with the central holding company, analysts follow exacerbated by the separation of ownership for enterprise overinvestment positive effect in local state-owned enterprises. It maybe that considering the legal system environment, the nature of the property, and protect small and medium shareholders, this approach conflicted with the platform independence, objectivity trait of the analysts, thus cannot effectively develop supervisory function, offering an optimistic outlook, intensify the information asymmetry of financial market. In short, divergence between the control rights and cash-flow rights of the firm’s ultimate controller will aggravate the degree of over-investment, so we believe that tighter regulation is the answer. Government officials should move to tighten regulations. We should strengthen supervision and control by improving our institutions. And we ought to punish severely the enterprises of whom the misconducts are turned a deaf ear to. This system help analysts play a positive role in the coordination of the administers and stakeholders, lowering the asymmetric information among investors and improving the quality of information disclosure, building the reputation system.It can stimulate mechanisms of production operators, in order to effectively play the role of operators reputation mechanism...