Legal Environment, Equity Governance And Investment Efficiency

In modern enterprises,as the core decision-making of the three major financial decisions,investment decision-making is an important factor which affects economic growth,determines the development direction of enterprises in the future,it is also a direct impact on the company's investment efficiency which affects the company's performance and business value.In recent years,the growth rate of investment is continuing to grow,a large number of inefficient investment behavior also followed,and caused a certain degree of negative impact to the economic growth.Exploring how to improve the efficiency of the company's investment is of great significance to the sustained growth of enterprises.As an important part of the corporate capital structure,the equity governance structure is an important institutional arrangement at the corporate governance level.It has a direct or indirect impact on the investment efficiency of the listed companies by influencing the cost of agency and the effectiveness of corporate governance.Reasonable equity governance structure is the prerequisite for listed companies to achieve efficient investment,stable capital growth and efficient governance,and efficient investment is the internal driving force to promote the continuous improvement of equity governance structure.In addition,each enterprise is in a specific external environment,the external environment to a large extent also affect the efficiency of the enterprise's investment,the company's equity governance is endogenous to a specific macro-institutional environment,so equity governance on investment efficiency must also be subject to the external environment constraints.The legal environment as an important external institutional environment,will inevitably affect the effect of equity governance on investment efficiency.Based on the special institutional background of China,this paper studies the relationship between legal environment,equity governance and investment efficiency,and takes the listed companies in Shanghai and Shenzhen as the research samples from 2011 to 2015,and finally obtains the following conclusions:(1)There is a significant positive correlation between the legal environment and the investment efficiency,which is mainly manifested as a significant inhibitory effect on overinvestment and has no significant impact on the underinvestment;(2)The proportion of ownership of the largest shareholder,the degree of equity matching,the proportion of institutional investors holdings and the investment efficiency are significantly negatively correlated,they can significantly exacerbate overinvestment and underinvestment;(3)the nature of property rights is significantly positively correlated with the efficiency of investment,and the over-investment and underinvestment are significantly inhibited;(4)The separation of two rights has no significant effect on investment efficiency and has no significant impact on overinvestment and underinvestment.Further research found that:(1)in the impact of investment efficiency,the legal environment and the separation of the two rights,institutional investors holding effect of substitution,that is,weak legal environment will strengthen the separation of power,institutional investors holding investment efficiency of inhibition.This effect is mainly reflected in the relatively low legal environment of the region;(2)in the impact of over-investment,There is a substitute effect in the legal environment and the separation of the two powers,that the weak legal environment will strengthen the separation of the two powers on the excessive investment inhibition,this effect is mainly reflected in the relatively low legal environment in the region;(3)there is no alternative or complementary effect between the legal environment as a whole and the nature of the property,but in the weak legal environment,the two can play a certain role in the alternative.