Product Market Competition, Debt Heterogeneity And Over-investment

As is known to all, investment and financing activities are inevitable and the most basic financial activities for the modern enterprise. And investment is the core content of the enterprise production and management and financing can provide funds for the enterprise operation, which provide enterprise management and operation support. The relationship between the two has been as the subject and direction that academic lay special stress on studying. The correct investment decision can enhance corporate value, but if lack of understanding of the market and blind expansion of the investment will bring huge losses to the enterprise. So the urgent problem is that how to improve the efficiency of business investment, realize the maximization of enterprise value. And so far, most scholars' research is mainly concentrated in the effect of debt, debt maturity structure on corporate investment behavior. However, the study about the relationship between heterogeneity and firm investment behavior is relatively less. The enterprise gets different supervision of the external creditors because of the different heterogeneity of debt. How to reflect the role of debt heterogeneity? Enterprises inevitably withstand the pressure from the outside during the process of the existence of the business. Then the external environment where the enterprises are in will also affect the firm's choice. Meanwhile, the relationship between heterogeneity of debt and over investment will change according to the external environment. This article used the data of listed companies to examine the above problems, he listing Corporation data inspection of the above issues, which not only enriched the theoretical framework of the debt heterogeneity, but also made the complement and improvement of theory and method about the research of corporate debt heterogeneity.After summarizing the related theoretical basis and the research results at home and abroad, this paper takes A-share listed companies in Chinese Shanghai and Shenzhen stock market as samples in 2011-2014.Then it constructs model to explore the relationship between debt heterogeneity and corporate over investment behavior. This paper gets the enterprise excessive investment in the model of Richardson's investment, in order to study the debt heterogeneity effect on over investment behavior. At the same time, the effect of debt heterogeneity is different in the case of product market competition.Through the analysis of the results about the empirical study, the thesis finds that there exists inefficient such as the excessive and insufficient investment behavior in Chinese listed companies, which is a common phenomenon. Although the insufficient investment samples are more than over investment, but the excessive investment behavior is more serious. Debt heterogeneity can obviously inhibit the excessive investment. That is to say, the more sources of debt, the less of corporate over investment behavior will be. And when the competition in the product market is fierce, the inhibitory effect of debt heterogeneity on excessive investment will be more obvious. Through empirical study, we conclude that in order to reduce corporate over investment behavior, first of all we should strengthen the corresponding laws and regulations construction, reduce the trade protectionism, and especially divide for some monopoly industries. Secondly, we had batter encourage enterprises to get diversified financing, perfect the diversified financing channels, and focus on the development of the bond market. Meanwhile, lower the listing threshold and make the full use the function of the market. Finally, the governance role of debt financing on over-investment can be realized, which can optimize the investment efficiency and enhance the value of the company.