Research On The Problem Of Non-efficiency Investment Of State-owned Enterprises Under The Soft Budget Constraint

The reform of state-owned enterprises has always been the focus of China's economic reform.Since 1990,a large number of state-owned enterprises have withdrawn from the tide of reform and the number of state-owned enterprises has been declining.Although the number of state-owned enterprises has been reduced,the monopoly advantage of the capital market has been further strengthened by the government-controlled large state-owned enterprises after the reform,and the number of state-owned enterprises involved in investment is also increasing.In 2008,the "four trillion investment" policy introduced by the government in response to the economic crisis has injected a lot of capital into the investment and development of Chinese enterprises,and the amount of investment in state-owned enterprises has increased year by year.However,the efficiency of investment in state-owned enterprises is not very optimistic.Due to the obvious soft budget constraint of state-owned enterprises,more and more scholars have interest in researching the soft budget constraints' influence on the efficiency of state-owned enterprises investment.In this context,by utilizing the approaches of normative research and case study,this paper mainly analyzes the non-efficiency investment of state-owned enterprises affected by soft budge strain.This paper first sorts out and reviews the research literature and related theories delivered by scholars both at home and abroad,regarding budget soft constraints and inefficient investment,and deduces how the soft constraints of the budget lead to the inefficient investment of enterprises so as to know the impact mechanism of both and provides a theoretical support for the follow-up case analysis of the paper.Secondly,this paper analyzes the investment situation of Chinese enterprises.Based on the collection and calculation of relevant data,this paper analyzes the investment efficiency of Chinese enterprises: firstly,analyzing the general investment efficiency of China's economy from a macroscopic angle,it points out that it is a common phenomenon that China's enterprise wholly suffers problems of high investment with lower interests;secondly,the paper centers on the analysis of the investment efficiency of state-owned enterprises and finds that the inefficiency investment in state-owned enterprises is more serious.Finally,the paper analyzes the soft constraints of state-owned enterprises,and mainly summarized its implementation and its impact on the efficiency of state-owned enterprises.On the basis of the above theoretical analysis and current research,this paper analyzes the soft budget constraints and the inefficient investment of state-owned enterprises through concrete cases.Taking the old state-owned enterprises Yunnan Copper as a case,this paper explores whether the soft constraints of Yunnan Copper affected inefficient investment,which led to the decline in corporate performance,from a broader scale,such as the incentive to inefficient investment,whether there is sufficient funding to support its large-scale investment,the investment efficiency situation,and its horizontal comparison analysis with the identical industry's investment efficiency.Through the case analysis,this paper found that: there is the phenomenon of inefficient investment in Yunnan Copper,which emphasized on over-investment.Specifically,the Yunnan Copper underwent diversified expansion,procured fixed assets,many minerals and enter real estate fields under the influence of Yunnan Provincial Government's policy of building hundreds of billions of enterprises and Yunnan's development strategy of billion plan.What's worse,the other incidents like large corruption caused by the internal management of Yunnan Copper.All of those penetrated adverse influence on the development of Yunnan Copper and suppressed its healthy development.In the inefficient investment decision-making and corporate governance,the expansion did not pushed the company to the peak,but brought about deteriorate operating conditions and successive years of losses.Eventually,this paper puts forward some improvement measures from the actual situation of our country,hoping to make the soft budget constraint through the joint endeavors from both government and the enterprise and so on,to improve the inefficient investment situation of the state-owned enterprises and set good example for development of the state-owned enterprises.The innovation of this paper is to select the specific case enterprise,and take the ten-year financial data of the case company for the research interval.According to the specific financial data of the enterprise,this paper analyzes the influence of the soft budget constraint on the inefficient investment of the state-owned enterprise.This paper mainly selects the state-owned enterprises as the object of soft budget constraints and studies via cases the impact of budget soft constraints on their inefficient investment,which enriches the literature of inefficient investment.